New car sales increased 18.2% from last year

Car industry was one of the most injured areas during -and after- the pandemic. It is not easy to overcome, there are many factors that come together such as supply shortage or inflation. The good news is that the car market is already showing rising numbers.

2020 was a really hard year for car sellers. Domestic automotive sales passed from 536 612 units in 2019 to 380 207 during the following year. Of course that year was expected to show a poor performance considering the pandemic context, but after two years the market is finally showing increasingly better rates.

Here are some numbers: in November 2022, the year-on-year increase was 18.2% according to the New Vehicle Sales stats published by the National Association of Automobile Manufacturers of South Africa’s (Naamsa). This result is surprising considering several negative economic influences like long-term Covid lockdowns in China and an important increase in load shedding.

sales by types of vehicles

As related by the association, industry’s medium and heavy truck segments have shown a positive performance during November, reporting 900 and 2 177 units respectively. When it comes to medium commercial vehicles the growth represented a year-on-year increase of 17.5% meanwhile commercial heavy trucks and buses increase was 22.6%.

New light commercial vehicles, bakkies and mini-buses also reflected great numbers with an increase of 2 323 units, representing a year-on-year rise of 20.8%.

The total reported sales registered a number of 49 413 units and comprise rental industry sales, dealer sales, sales to industry corporate fleets and sales to government.

Regarding the export of vehicles and automotive components, it recorded a remarkable growth compared with last year: the year-on-year increase was 64.6%, from 20 831 cars exported in November 2021, to 34 310 vehicles in November 2022.

Market projections

Even if November 2022 rates were promising, several consultants agree by considering that the performance of the new vehicle market is decelerating. The main reason that explicates this behavior is related to the seventh consecutive increase in interest rates.

This could curb the sales levels, as many consumers use financial services, such as bank loans, to buy a new car. An interest rate’s increase also weighs on disposable income. At the same time, general inflation elevates car maintenance costs. Just think about fuel consumption, or car policies, which prices rise when the vehicle cost increases as it can be seen through a car insurance calculator.

Considering the previous factors, the Naamsa report reflects that a single-digit growth in new vehicles sales could be expected for the next year.

Concerning vehicle exports, the forecast shows a different horizon. This area revealed a better performance compared to November 2021. At the same time, Naamsa consultants consider that the risk to export sales remains low given the persistently high inflation and aggressive interest rate hikes in most of the advanced and developing countries.

Finally, the Naamsa report mentions the instability of organized business in South Africa as another concern, especially considering the news that President Cyril Ramaphosa may be impeached.

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