Domestic sale of new vehicles and exports only forecast to recover in 2024 – Naamsa
THE AUTOMOTIVE Business Council has warned that the domestic sales of new vehicles, as well as exports, will recover to pre-pandemic levels only in 2024 as economic growth slows this year due to crippling power cuts.
The National Association of Automobile Manufacturers of South Africa (Naamsa) on Friday released its First Quarter 2023 Quarterly Review of Business Conditions Report for the new motor vehicle manufacturing industry/ automotive sector.
According to Naamsa, aggregate new vehicle sales during the first quarter 2023 recorded an increase of 1.6% compared to the corresponding quarter 2022, a gain of only 0.2% compared to the fourth quarter 2022.
Aggregate industry commercial vehicle sales increased by 8.3% to 46 057 units sold in the first quarter, an increase of 3 509 units compared to the 42 548 units sold during the first quarter of 2022. However, new passenger car sales of 92 247 units recorded a decline of 1.5%, or 1 397 units compared to the 93 644 new passenger cars sold during the same period last year.
Naamsa said the mixed performance of the vehicle segments during the first quarter 2023 from a year ago reflected the stressed consumer environment.
It said the passenger car segment remained under pressure in view of higher interest rates and cost of living increases, while the heavy commercial vehicle segments mirrored economic activity affected by load shedding and business sentiment in the country.
The light commercial vehicle segment, however, benefited from new domestically manufactured bakkie launches supporting the segment.
New energy vehicle sales by 14 industry brands increased by 18.8% from 1 401 units in the first quarter of 2022 to 1 665 units in the first quarter 2023, reflecting a significant year-onyear increase. However, Naamsa CEO Mikel Mabasa said the new vehicle market remained flat during the first quarter 2023 and as a leading economic indicator reflected the close correlation with a stagnating economy.
Mabasa noted that the South African Reserve Bank (SARB) raised interest rates twice during the quarter and in total by 425 basis points since November 2021.
The SARB highlighted that due to extensive load shedding and logistical constraints the supply performance of the economy remained severely impaired and lowered its forecast for economic growth for 2023 to 0.2% from the 0.3% expected in January.
Mabasa said the knock-on effect of electricity supply shortages on the economy and business confidence were of major cost concern, and it was becoming increasingly clear that the weakness in the economy had become quite broadbased, with most sectors under severe pressure.
“Ongoing inflationary pressures as well as the continuous and ever-increasing energy challenges remain impediments to the new vehicle market while the substantial increases in interest rates may result in accelerating the buy down trend in the market,” Mabasa said.
“A host of new model introductions and improved new vehicle stock are expected to support new vehicle sales over the balance of the year but many downside risks to growth persist and the new vehicle market’s renowned resilience will again be duly tested in 2023.” During the first quarter 2023, vehicle exports declined by 4% to 84 811 units compared to the 88 363 units exported in the corresponding quarter 2022.