By Moses Akaigwe
South African new vehicle sales have returned to first quarter levels with June sales once again moving above the 40,000-unit threshold. The result will have brought some reassurance to the market after more-depressed April and May sales, providing stronger growth year-on-year.
According to NAAMSA | the Automotive Business Council, new vehicle sales grew 7.6 percent during June to 41,019 units. It represented a steady restoration of sales since the April slump but still remains some distance off the good performances of February and, especially, March sales.
“The new vehicle market remains volatile for many reasons, most of these beyond the control of manufacturers,” said Lebogang Gaoaketse, Head of Marketing and Communications at WesBank. “There are well-known pandemic-related consequences that continue to impact market performance. Additionally, broader challenges facing the country over the past few months have compounded the recovery of new vehicle sales.”
WesBank is referring to the natural disasters impacting production and logistics, particularly in KwaZulu-Natal; the ongoing global supply constraints, not only of new vehicle stock, but also parts; economic factors impacting affordability such as fuel prices and rising interest rates; as well as the impact the recent state of the energy grid will inevitably have on consumer and business confidence over the coming months.
“The market is unpredictable, suffice to say that it appears demand remains higher than the market is able to deliver,” says Gaoaketse.
That demand translated mostly into passenger car sales with that segment of the market growing 20.6 percent to 29,545 units during June compared to the same month last year. Dealer performance in the segment performed even better, growing 21.6 percent to capture 83.6 percent (24,709 units) of sales indicating strong consumer demand. The overall passenger car market was further buoyed by 3,295 units (up 26.7 percent on June last year) of rental car sales.
By contrast, Light Commercial Vehicle (LCV) sales slowed 20.8 percent to 8,877 units, with dealers taking a harder hit down 25 percent.
As a result, first-half sales ended on 253,442 units, an increase of a substantial 11.4 percent compared to the first half of 2021. “While we should celebrate this recovery of new vehicle sales, this performance must be considered within the context of more stringent COVID-19 regulations during the first half of last year,” says Gaoaketse.
“Based on similar performance during the second half of the year, it is possible to see a South African new vehicle market exceed 500,000 units this year.”