Hopes of a post-election bounce in new-vehicle sales were realised in July, with data released on Thursday showing 44,229 new cars and commercial vehicles were sold last month.
Though only 1.5% more than the 43,572 units recorded in the same month a year earlier, total new-vehicle sales represented a rare year-on-year improvement in what has been a consistently difficult 2024.
July sales comfortably outdid June’s 39,873, according to data from vehicle manufacturers and importers association Naamsa.
Brandon Cohen, chair of the National Automobile Dealers’ Association, said he hoped the improvement will kick-start a stronger performance for the rest of the year — though economic reality suggests that should not be taken for granted.
“Consumers are beginning to visit dealerships more frequently,” he said. “Confidence in the country and overall sentiment are improving, leading people to gradually return to car purchases.
“However, high interest rates and the unsustainably high cost of living continue to affect vehicle finance accessibility. While there is a clear desire for vehicles, affordability remains a significant barrier.”
Early this year, dealers and analysts said the weak sales performance owed something to consumer and corporate customers delaying purchases because of uncertainty about the political and economic direction of the country in the build-up to the national election.
With a coalition government of national unity in place, some of that pent-up demand has been released.
WesBank marketing head Lebo Gaoaketse said application rates for vehicle finance supported the view that demand is increasing — even if many applicants are turned down.
He attributed July’s improved performance to “marginally improving economic conditions, returning consumer and business confidence in the wake of four months of consistent electricity supply, and the hope of some budget relief for consumers during the second half”.
Rate relief
There is a growing view the Reserve Bank could cut interest rates twice before the end of the year. Cohen said: “Some consumers are already factoring this potential change into their purchasing decisions.”
Though July’s improvement was a relief, it does not disguise the continued weakness of the 2024 new-vehicle market, or that the motor industry may have to wait at least one more year for it to recover to pre-Covid levels. There were 536,612 new vehicles sold in 2019, while in 2023 the figure was 531,787.
Naamsa’s figures show that cars drove last month’s improvement: 29,934 were sold, a 6.8% improvement on July 2023. Aggregate car sales for the first seven months of the year remain behind those at the same stage of 2023 — 191,650 units compared with 201,943, down 5.1%.
Sales of all sizes of commercial vehicles, from bakkies and minibuses to extra-heavy trucks, all lost ground in July compared with a year earlier and all are lagging behind in aggregate sales for the year.
Combined sales of cars and commercials up to July totalled 289,982. That’s 6.3% fewer than over the same period of 2023.
Exports took a pounding last month. At 25,461 vehicles, exports were down 33.2% from a year earlier, while shipments for the first seven months were 13.5% slower at 182,455.
Naamsa blamed the continuing slump on economic strain in Europe, the destination for more than half of SA’s vehicle exports.
“Eurozone GDP grew by only 0.3% during the second quarter of 2024, with Germany’s GDP contracting by 0.1%. The direction and performance of vehicle exports for the balance of 2024 will remain linked to central banks’ gradual monetary easing in major markets,” it said.
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