Sluggish but steady: SA vehicle sales show signs of post-pandemic recovery
By Khulekani On Wheels / on January 10th, 2024 / in Car News, featured
By Otsile Kadiege
Naamsa, the National Association of Automobile Manufacturers of South Africa, recently reported that the new vehicle market registered its fifth consecutive month of year-on-year decline during December 2023. With aggregate industry new vehicle sales at 40 329 units, recording a decline of 1 392 vehicles or a loss of 3,3% compared to the total new vehicle sales of 41 721 units during the corresponding month of December 2022.
New vehicle sales statistics
The December 2023 new passenger car market and light commercial vehicle market reflected a weak performance with a year-on-year volume decline of 3,9% in the case of new passenger cars and a loss of 2,9% in the case of light commercial vehicles. Sales of medium commercial vehicles declined year-on-year by 24,2% while heavy commercial vehicles and buses increased by 13,9%.
The new vehicle market’s prolonged recovery from the COVID-19 pandemic stuttered towards the second half of 2023, following two previous years of sound rebound. The market was still 1,3% below the pre-pandemic level in 2022 and for most of 2023 was well on track to recover to the pre-pandemic level of 2019. However, amidst a depressed economy, elevated cost of living increases and power outages, new vehicle sales finally yielded to the pressure with major logistical challenges at the country’s ports towards year-end further undermining the new vehicle market’s ability to full recovery. That said, new vehicle sales increased by only 0,5% year-on-year in 2023 to 532 098 units compared to the 529 556 units in 2022 and will likely now take four years to recover to the pre-pandemic level of 536 612 units in 2019.
On a positive note, heavy commercial vehicle sales already exceeded the pre-pandemic level in 2022, supported by the transport of goods forced onto roads due to the rail inefficiencies. The country’s weak economic growth rate, although still marginally positive, remains a key challenge for the new vehicle market going forward in view of the close correlation between new vehicle sales and the GDP growth rate. With a modest GDP growth rate of 1% projected for 2024, the new vehicle market would likely only improve by single digits of around 5% compared to the level of 2023.
Export sales statistics
Export sales in December 2023 ended the year on a positive note and at 26 612 units reflected a gain of 317 vehicles or an increase of 1,2% compared to the 26 295 vehicles exported during December 2022 to end the year at a record-high of 396 290 units. Overall, out of the total reported industry sales of 40 329 vehicles, an estimated 35 483 units or 88,0% represented dealer sales, an estimated 8,7% represented sales to the vehicle rental industry, 2,2% to government, and 1,1% to industry corporate fleets.
The South African automotive industry and the country’s economy have navigated through a turbulent landscape in a year marked once again by unprecedented economic challenges and worldwide uncertainties. Globally the conflict between Russia and the Ukraine continued into 2023 while the recent Israeli conflict further disrupted supply chains. On the domestic front, record levels of load-shedding, a 10th consecutive interest rate increase since November 2021 to reach a 14year high during May 2023, a depreciation of the Rand to a record low of R19,92 against the US dollar in June 2023 along with year-end logistical constraints with vessel delays and container backlogs at ports remained binding on the domestic economic growth outlook.