After months of outperforming expectations, new-vehicle sales hit a “tipping-point” in August as the full weight of economic reality hit consumers, Brandon Cohen, chair of the National Automobile Dealers’ Association, said on Friday.
He was speaking after motor industry association Naamsa released figures showing that the overall market fell by 2.1% last month from its August 2022 level. Car sales fared particularly badly, sliding 6.7%.
A total of 45,679 cars and commercial vehicles were sold last month, down from 47,155 in August 2022. Car sales numbered 28,951, compared with 31,015 last year. After eight months of 2023, the aggregate market for all new vehicles was 355,246. That was 3.4% ahead of the 343,517 at the same stage of 2022. Year-to-date car sales were down 3%, from 238,148 to 231,112.
The car market has struggled for several months but its weakness has been compensated for by sales of bakkies and larger commercial vehicles.
However, it’s difficult to draw clear conclusions from comparisons between this and last year. The four-months closure of Toyota SA’s Durban assembly plant because of flood damage in April 2022 significantly reduced overall industry production and sales.
Even so, many industry analysts have argued that 2023 sales have been better than expected — until now.
“The SA new vehicle market has demonstrated its resilience in the face of ongoing economic downturns for several months,” Cohen said. “However, in August, it could no longer withstand the pressure from increasing interest rates, fuel prices, vehicle costs, and a significant decrease in household spending ability due to the rising cost of living, resulting in lower disposable income for consumers.”
He said interest rates were the main obstacle to vehicle sales. Though rates appear to have temporarily levelled out, he said every recent increase has added to consumers’ financial commitments and made it harder to secure credit.
“When we factor in new car pricing and the negative impact of a weak rand, we witness a perfect storm of reduced affordability,” he added.
Naamsa CEO Mikel Mabasa said: “The medium-term outlook for business conditions in the new-vehicle market continues to reflect subdued demand for high-priced items such as vehicles, which correlates with a stagnating domestic economy.”
Vehicle exports enjoyed another boost last month, rising by 33.5% to 41,462. The previous August’s figure was 31,057. After eight months of 2023, exports were 12.4% ahead — 240,503 compared with 221,928.
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