A 2.2% year-on-year increase in April new-vehicle sales has confounded doomsayers who had predicted another dismal market performance.
After eight successive months of falling sales, most notably an 11.8% drop in March, there was general pessimism about April’s figures.
Business Day reported this week that Nedbank had predicted a 10.4% fall.
Instead, figures published Thursday by motor industry body Naamsa showed that sales of 38,172 cars and commercial vehicles, were 2.2% better than April 2023’s 37,358. It was the first time since July last year that monthly sales outperformed those of a year earlier.
WesBank called it a “blip of positivity”. Car sales, the market’s achilles heel since mid-2023, totalled 25.972 — a 6.1% improvement over the previous April’s 24,479.
Light commercials, primarily bakkies and minibus taxis, were less fortunate, losing 9%. But medium, heavy and extra-heavy commercials did better, gaining 5.9%, 7% and 15.9% respectively.
Brandon Cohen, chair of the National Automobile Dealers’ Association, greeted the upturn with relief. He said: “The industry’s ability to weather challenges and exhibit year-on-year comparative growth amidst adversity is commendable.”
No-one is getting too excited, though.
WesBank marketing head Lebo Gaoaketse said that because of the distribution of public holidays this year April enjoyed three more selling days than April 2023. The aggregate new-vehicle market for the first four months of this year still lags that of 2023.
Sales of all vehicles to the end of April totalled 168,970, or 4% fewer than the 175,928 at the corresponding matching stage last year. Car sales were 5.1% in arrears, 110,749 against 116,725. Naamsa CEO Mikel Mabasa suggested that a month without load-shedding may have contributed to business and consumer confidence and sales.
He hoped that once the general election is over this confidence would grow, particularly if it is followed by a downward cycle in interest rates. Gaoaketse is not holding his breath.
WesBank had predicted market growth in the second half of the year on lower interest rates. But with the Reserve Bank warning that rates will remain higher for longer because of inflation, WesBank says consumers will face continued affordability and credit challenges.
Gaoaketse said: “High interest rates impact already-indebted consumers on linked-rate agreements to service debt, whilst also influencing the purchase decision on a big capital asset such as a vehicle given the wherewithal to afford the instalments.”
“We expect this will continue to limit the ability for banks to service applications and, therefore, continue to lengthen the (vehicle) replacement cycle.”
Relief at higher local sales did not extend to exports. April shipments of 23,394 were 23.9% weaker than the 30,749 of a year earlier. After four months, the year-to-date total is 105,058 — a 9.1% drop from 2023’s 115,560.
Mabasa said: “For the export-oriented South African automotive industry, the longer-term global economic outlook remains clouded by risks to the inflation trajectory, the recent conflict in the Middle East, and the effects of climate change.
“As an export-oriented industry, it is essential for the domestic automotive industry to continue diversifying risk by pursuing wider geographical exposure to mitigate the impact of country or regional cyclical economic conditions.”
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