IN SECOND GEAR
Cautious optimism — New vehicle sales give industry a modicum of hope for 2023 recovery
The South African motor industry is slowly getting back to its feet in the wake of the pandemic, even though the bounceback last year was slower than that seen in 2021.
New vehicle sales are improving, but they are likely to take a while to reach even pre-pandemic levels, as industry body Naamsa said 2022’s sales were 1.4% below those of 2019.
Still, that’s reason enough to celebrate, especially after the battering inflicted by the Covid lockdown.
After a “robust” recovery in the 2021 domestic new vehicle market — increasing year-on-year by 22.2% to 464,493 units, compared to the 380,206 units sold during 2020 — total new vehicle sales recovered further by 13.9% to 528,963 units in 2022; still less than the 536,612 units sold in 2019. This, Naamsa said, is despite the many national and international headwinds.
The new vehicle market registered its 12th consecutive month of year-on-year growth during December 2022, with total sales at 41,783 units — a 16.2% increase on the same period in 2021.
December 2022 YoY volumes increased by 15.4% for new passenger cars and 16.1% for light commercial vehicles.
Medium commercial vehicle sales increased YoY by 36.9%, with 23.1% more heavy commercial vehicles and buses sold.
December 2022 boasted some bumper sales: 26,302 units — a 24.2% YoY increase on 2021 — left South African ports.
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Overall, out of the total reported industry sales of 41,783 vehicles, 37,479 units were sold via dealers; 7.3% were sold to the vehicle rental industry; 1.5% to the government and 1.5% to industry corporate fleets.
Naamsa notes that new vehicle sales are a good barometer of the health of the domestic economy.
“Following a fairly upbeat first quarter 2022 industry performance, global supply chain disruptions — along with the impact of the devastating floods in KwaZulu-Natal, elevated inflation, an upward trend in interest rates, record fuel prices, as well as record highs in the frequency and intensity of load shedding — weighed heavily on both business and consumer confidence.
“However, the new vehicle market’s performance in 2022 remained resilient despite the multiple national and international headwinds.”
Unsurprisingly, lifting the Covid restrictions — and the accompanying recovery in business and leisure travel — helped the vehicle sector regain some market to counter the growing pressures on the cost of living, but the majority of consumers are buying smaller and more affordable cars.
South Africa is also plagued by consumer price inflation at a 13-year high, interest rates that are at their highest level since 2016, interminable rolling blackouts and an economy that is battling to stay afloat.
And then there’s the added pressure of supply chain issues and geopolitical uncertainty, compounded by high inflation, China’s recent (and disastrous) rapid reopening, and aggressive interest rate hikes in many advanced and developing countries.
The UK and Europe — which have been battered by the war in Ukraine and crises around the cost of living and energy — are SA’s biggest export markets. BM/DM