Motor companies, dealers and banks are doing their best to stimulate sales of new cars, but the trouble is there are too few people with the money to take advantage of the incentives.
New-vehicle sales retreated again in September as declining business confidence and reduced disposable income continued to take a toll on buyers. Figures released on Monday by motor industry association Naamsa show that 46,021 cars and commercial vehicles were sold last month — 4.1% fewer than the 47,984 of September 2022.
In a continuing trend this year, car sales were the big losers, falling 8.4% from 32,392 to 29,669. Light commercial vehicles, mainly bakkies and minibuses, continued to outperform last year’s flood-hit performance, but it was a month to forget for most truck sectors. Only extra-heavy vehicles kept their heads above water.
With three-quarters of 2023 gone, aggregate new vehicle sales for the year totalled 401,305. That is 2.5% more than the 391,500 at the same stage last year.
The decline is not for want of trying, said Brandon Cohen, chair of the National Automobile Dealers’ Association. "(Vehicle) manufacturers, distributors and importers have begun offering a wide range of incentives and discounts on vehicles, from luxury to budget cars,” he said. “Banks are also introducing innovative finance schemes to stimulate buying activity. The market offers favourable opportunities for buyers seeking a good deal.”
Finance applications are up, but not enough people are passing credit checks to make a significant difference to the market. Cohen said that many potential customers — private and corporate — are adopting a wait-and-see attitude in the hope that the situation will improve.
But there is no obvious sign of that happening in the short term. As Naamsa noted, the Reserve Bank recently reported that household debt exceeded household disposable income by 62.5% in the second quarter of 2023.
Cohen described September as a “challenging” month for sales. Naamsa suggested it could have been worse. Given all the economic challenges facing SA, “the industry has displayed a modest, yet commendable, resilience in year-to-date new-vehicle sales”, it said.
The industry also faced mounting challenges, said Naamsa. “Various external business factors, including higher fuel prices, ongoing challenges in transport logistics, Eskom’s incapacity to meet industry’s energy demands, the volatility in commodity prices and the intricate external environment have exerted significant pressure on the automotive industry’s key performance indicators in September 2023.”
Vehicle exports also disappointed in September. They fell 12.5%, from 41,464 to 36,247, compared with a year earlier. For the year to date, however, foreign shipments were 8.3% ahead of 2022’s, up from 263,392 to 285,200.
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