Long-expected downturn in vehicle sales in South Africa materialises

02 December 2023 | From Arrive Alive

The resilience of South African motor vehicle retailers has finally yielded to the pressures of a depressed economic environment, resulting in a substantial decline across all market sectors in November. Brandon Cohen, National Chairperson of the National Automobile Dealers’ Association (NADA), expressed concern as he analysed the November sales figures provided by naamsa | The Automotive Business Council.

The total market witnessed a notable 9,8% contraction, dropping to 45,075 units compared to the 49,986 units sold in November 2022.

"November marked the fourth consecutive month of retail sales falling below the same month in the preceding year," remarked Cohen.

Despite the downturn, Cohen highlighted a glimmer of positivity, stating, "Year-to-date vehicle sales stand at 491,967 units after 11 months, still 0.8% higher than the comparable period last year. The challenge now is whether December sales can sustain this slim annual growth."

Exports, a crucial element for local manufacturers' financial viability, remained robust, exhibiting a 25.5% increase over November 2022 figures. Year-to-date exports rose by 13.8%, reaching 370,284 units after 11 months.

Cohen attributed the downturn to a confluence of global unrest, political uncertainty, increased load shedding, and logistical challenges at ports, roads, and railways. "These factors, coupled with rising household costs, have collectively dampened consumer and business confidence," Cohen explained.

Dealers accounted for 84.8% of total sales, with 9.5% attributed to the rental industry, 2.6% to corporate fleets, and 3.1% to government.

In November, every segment of the market experienced setbacks. The sales of passenger cars registered a significant decline of 12.1%, reaching 29,384 units, reflecting a substantial reduction of 4,052 sales compared to the same month in the previous year. Conversely, the Light Commercial Vehicle market, traditionally more resilient, faced comparatively milder losses, decreasing by 3.9% to 12,941 units.

Despite attractive consumer offers and efforts to reduce stock levels before year-end, November's sales performance was disappointing. "Even with increased interest in long-term leasing and step-payment financial programmes, these incentives failed to attract significant numbers of actual buyers," Cohen said.

Cohen concluded by expressing hope that the closure of the mining and manufacturing sectors over the festive season would alleviate electricity demand, brightening the outlook for the holidays.

NADA is a constituent association of the Retail Motor Industry Organisation (RMI).

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