Domestic car sales rose by more than 50% last month and exports by 577%. But leave the champagne on ice and the party hats in their box. It was actually an average month.
Figures published on Monday by Naamsa revealed that 31,455 cars were sold to SA customers in July and 23,479 to foreign buyers. Compared with the 20,938 and 3,487, respectively, in the corresponding month of 2021, you’d be forgiven for thinking the SA motor industry was in dreamland.
It’s not. In July 2021, riots, level 4 Covid lockdown and a cyberattack on Transnet, which brought its ports to their knees, limited the industry’s ability both to build vehicles and get them to buyers.
That’s why, for most categories of cars and commercial vehicles, last month appears such a comparative success. Local sales of medium trucks rose 33%, heavy trucks 21.7% and super-heavies 18.7%.
The exception was light commercial vehicles, bakkies and minibuses. Thanks to the continued closure of most production lines at Toyota SA’s Durban assembly plant after April’s floods, aggregate industry sector sales fell 6.9% last month from a year earlier.
Domestic sales of all new vehicles last month totalled 45,593 — a 30.9% improvement on the previous year.
A fairer indicator of July 2022 lies in comparison with the previous month, June, when 41,052 cars and commercial vehicles were sold.
National Automobile Dealers Association chair Mark Dommisse described the performance as “remarkably buoyant in a tough market characterised by rising inflation, interest rates and the fuel price”.
For the first seven months of 2022, aggregate sales of 297,133 vehicles were 13.9% ahead of 2021’s 260,823 at the same stage.
Here again, Naamsa CEO Mikel Mabasa warned against celebrating. He observed that the Absa purchasing managers’ index (PMI), tracking expected business conditions in six months, dipped to 49.4 in July.
“This was the first time since the second quarter of 2020, during the strictest phase of SA’s Covid-19 lockdown restrictions, that respondents expected conditions to worsen going forward,” he said. Rising interest rates were also expected to hurt consumer and business sentiment, “and consequently the new-vehicle market”.
WesBank marketing head Lebogang Gaoaketse took a more optimistic view. “The significant increase in interest rates during the month may dampen August sales as new deals confront an affordability challenge or consumers simply delay purchase decisions,” he said. “Nevertheless, interest rates remain relatively low, continuing to make a new-vehicle purchase an appealing financial opportunity.”
Mabasa also sounded a warning on export growth. Despite the 577% year-on-year surge in car exports last month, overall vehicle exports rose by a lesser but still mountainous 177.7%. This was due to the continued absence of the Toyota Hilux from bakkie exports, where industry numbers fell by 6.9% from a year earlier.
Even so, exports for the first seven months of 2022 overtook 2021 for the first time. They now sit at 196,945, which is 2.5% ahead of the same stage 2021.
Mabasa said: “Though further new locally manufactured model introductions are expected to boost vehicle exports for the balance of the year, global economic growth prospects have been revised downwards.
“A key driver in this decline is the much weaker growth prospects for Europe, which is the SA automotive industry’s largest export region.”
Update: August 1 2022
This story has been updated throughout.
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