June sales up over 2022

Responding to the release of the new vehicle sales figures, Nada director, Gary McCraw, says a consistent stream of new and updated models, particularly in significant high-volume segments, along with improved availability of popular models, appeared to be crucial factors in sustaining sales growth.

McCraw says the enhanced supply of new vehicles, which fostered competition among various brands, was another positive aspect that influenced the market, with many buyers benefiting from numerous aggressive sales assistance programmes.

His comments follow on the release of the vehicle sales figures for June 2023, which showed that aggregate domestic new vehicle sales increased by 14.0% last month to 46 810 units from the 41 052 vehicles sold in June 2022.

McCraw described this double-digit percentage increase in sales as “remarkable” but highlighted that a year ago the Toyota plant in Durban was incapacitated owing to flood damage, which had an impact on the overall sales volume in 2022.

“Nevertheless, witnessing continued growth in the current challenging economic environment is encouraging, given that vehicle buyers are facing affordability pressures, a depreciating rand that drives prices higher, low business confidence and political instability.

“Fortunately, consumer inflation slowed to 6.8% in April, marking the lowest rate since May 2022. Additionally, the decreased frequency of power outages has provided a morale boost,” he says.

Dealers accounted for a slightly smaller share of the retail market than usual at 83.5%, while sales to the vehicle rental industry played a significant role and comprised 10% of total sales and 13.4% of the passenger car market.

McCraw says this indicated good activity in the car rental space as vehicle rental fleets start to grow for the July and December holiday seasons.

Despite the growth in year-on-year new vehicle sales in June 2023, McCraw says general sentiment towards making major purchases remains slightly negative in South Africa as consumers grapple with the effects of high interest rates.

“Looking ahead, if we can maintain the current rate of power outages, continue to experience a drop in inflation and benefit from the recent relief in petrol prices, sentiment may gradually improve.

“This, in turn, could lead to increased dealer sales as more new models become available and, hopefully, sales assistance persists,” he says.

WesBank head of marketing and communications, Lebo Gaoaketse, says despite seemingly low business and consumer confidence, new vehicle sales impressed last month with double digit growth to record the second-best sales month this year.

“South Africa’s new vehicle market is almost counter cyclical, displaying reassuring levels of growth that outperform most sectors of the economy.

“It is clear to see the correlation between actual market performance and levels of demand as measured by applications for finance, which are now firmly driving new vehicle deals as opposed to pre-owned purchases,” he says.