Break out the bubbly to toast the latest new-vehicle sales. But only one bottle. There’s no guarantee the unexpectedly good numbers will continue.
That’s the message from WesBank marketing head Lebogang Gaoaketse, after figures released on Friday showed that 50,607 new cars and commercial vehicles were sold in SA during March.
That was the highest monthly total since October 2019 and 16.5% better than the 43,423 of March 2021. That took aggregate sales for the first quarter of 2022 to 136,065 — 17.9% more than the 115,431 at the same stage in 2021.
Given rising interest rates, accelerating fuel prices and continuing shortages of some vehicles because of international components supply problems, “March’s new-vehicle market provided a lot to celebrate”, said Gaoaketse.
But then he observed: “The market still has challenges to face and shouldn’t be expected to continue displaying these levels of growth.”
In fact, it might be best if it does not. He said motor companies and their components suppliers preferred “sustainable stability” to “peaks and troughs of volume performance”. The former allows them to plan production volumes with some confidence.
Of course, that is too much to hope for at present, considering the market is still recovering from the effects of Covid, which saw production and sales grind to a virtual halt in 2020.
Nevertheless, Gaoaketse said sales so far this year suggested the market was heading for a period of sustained growth.
No-one is more excited with the situation than market leader Toyota, which sold more than 15,000 vehicles in March and, according to sales and marketing vice-president Leon Theron, accounted for 30% of all new-vehicle sales in the first quarter. He called the company’s performance “monstrous”.
Motor dealers are also crowing, after claiming 85.8% of total sales. Alex Boavida, vice-chair of the National Automobile Dealers Association, said at the weekend: “It is amazing the way sales in SA continue to grow substantially at a time when the world is in chaos and prices of commodities and other products are rocketing.”
The vehicle rental industry took 8.2% of the sales pot and the government 4.6%. The remaining 1.4% was sold into motor companies’ own fleets. Last month’s sales surge was driven mainly by car buyers.
Car sales grew 27% from a year earlier, from 26,599 to 33,790 — a performance Boavida called “staggering”. The first-quarter improvement was 25.4%, up from 74,475 to 93,475. Sales of light commercial vehicles, mainly bakkies, fell slightly in March but truck and bus sales flourished compared to a year earlier.
Boavida said this showed improved business confidence.
Can this be sustained? Mikel Mabasa, CEO of Naamsa/the Automotive Business Council, the industry body which publishes the sales figures, attributed the recovery to pent-up demand, normalising of business conditions and “enticing new model choices in the domestic market”.
Though he expected the temporary reduction in the fuel price levy to offer the market some relief, he added: “Escalating inflation risks, ongoing record fuel prices, low and stagnant economic growth and a rising interest-rate cycle will impact the new-vehicle market negatively going forward.”
While local sales brought industry cheer in March, there was no such luck for exporters. Vehicle exports fell 12.4% from a year earlier, from 39,146 to 34,285.
For the first quarter of 2022, the deficit was 4.1%, down from 89,474 to 85,804. The shortage of automotive semiconductors, which has stifled global motor industry production for more than a year, continued to affect some exporters.
Mabasa said the Russia-Ukraine conflict was also hurting motor industry supply chains and dampening consumer demand, particularly in Europe where most SA vehicle exports go.
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