It has not been an easy start to the year for the auto market with February sales down – albeit only 413 units – on the same month last year but, it does reflect and ongoing downward trend exacerbated by rising fuel prices, continued high interest rates and an economy under assault from recurring electricity blackouts.
Domestic new vehicle sales in February were 44 749 units, a fall of 0,9%, from the 45162 vehicles sold in February 2023. Export sales recorded a sound increase of 8 526 units or 27,5%, to 39,517 units in February 2024 compared to February 2023.
Breaking the naamsa numbers down further, the new passenger car market registered a decline of 925 cars, or a loss of 3,1%, compared to February 2023 – with Toyota Hilux and Ford Ranger taking the top two slots.
Sales of new light commercial vehicles, bakkies and mini-buses showed an increase of 328 units, or a gain of 2,5%, while the medium and heavy truck segments reflected a mixed performance for February 2024 at 645 units and 1 941 units, respectively, which is a decline of 54 units, or 7,7% in the case of medium commercial vehicles and, in the case of heavy trucks and buses an increase of 238 vehicles, or 14,0%, compared to the 1 703 units sold in the corresponding month last year.
According to Mikel Mabasa, naamsa CEO: “The ripple effect of higher interest rates, higher fuel prices and no relief for personal income-taxpayers in the 2024/2025 tax year would continue to impact household incomes for the foreseeable future.
“With the date of the 2024 South African general election announced to take place on May 29, economic uncertainty remains the reality for most households and businesses. Brands and dealerships are currently offering enticing incentives to prospective buyers, but it is anticipated that only once the interest rate cutting cycle commences, likely during the second half of the year, along with easing inflation, some upward momentum would be sparked in the new vehicle market.”
Mabasa welcomed the announcement made by the Minister of Finance, Enoch Godongwana during his Annual Budget Speech 2024 to support the transition to electric vehicles [EVs] through a strategic and investment driven plan.
“A notable component of the Minister’s announcement is the introduction of an investment allowance for new EV investments, set to commence in March 2026. This allowance enables businesses and investors involved in EV production to claim 150% of qualifying investment spending in the first year.
“This financial incentive is a crucial step in attracting investments, fostering innovation, and driving the growth of the EV sector within South Africa. The industry will continue to engage with Government to carefully manage some of the challenges associated with the implementation of the APDP2, especially concerning vehicles with limited local content due to the predominant location of battery production in Japan, South Korea, and China. In the short-term, the existence of low local content necessitates Government’s consideration to support other key technologies such as traditional hybrids and plug-in hybrids.”
Lebo Gaoaketse, Head of Marketing and Communication at WesBank pointed out February was actually the seventh straight month in which sales figures declined.
“February sales were the smallest decline in sales over the past seven consecutive months of negative growth,” he says. “The month also represented a fairly robust volume, which was slightly higher than the average monthly sales last year.”
But consistency shouldn’t be confused with sustainability, warned WesBank.
“Despite February sales being down, they do display some reassuring levels of consistency in volume terms over the past 18 months,” says Gaoaketse. “But first half sales are expected by industry to trade in tough conditions, meaning the sector shouldn’t expect any form of sustainable growth over the next four months.”
According to Brandon Cohen, Chairperson of the National Automobile Dealers Association (NADA), the budget speech further strained consumer pockets, compounded by the looming general election.
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"We observe a trend of consumers downsizing and conducting extensive research into pricing and financing options. Affordability remains a crucial factor in purchasing decisions. South Africans are increasingly turning to more budget-friendly vehicles due to economic challenges, high interest rates, and escalating fuel costs,” he says.
The local market is becoming increasingly competitive, with a growing number of Asian participants. Chinese brands are making a significant impact in both the passenger car and overall truck markets.
Statistics from naamsa highlight a shift towards Chinese-manufactured vehicles, driven by competitive pricing, quality, and high-tech specifications.
This trend is reshaping the competitive landscape, posing challenges for traditional premium dealerships. The premium segment is under pressure, with customers shifting from new vehicles to demos and pre-owned cars. Some loyal premium brand customers extend maintenance plans, but the majority are either buying down, waiting or transitioning to pre-owned vehicles, leading to significant growth in the pre-owned car market compared to new cars.
Colin Windell
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