Business Maverick

VEHICLE INDUSTRY

Consumers pull up the handbrake on new car purchases

Consumers pull up the handbrake on new car purchases
(Photo: Waldo Swiegers / Bloomberg via Getty Images)

Naamsa blames the decline in sales on economic uncertainty, the elections and public holidays.

A country on tenterhooks after a landmark national election, too many public holidays and a fading economy are weighing heavily on the new vehicle market, which suggests consumers have reached for the handbrake on big-ticket purchases. 

Naamsa says May’s new vehicle sales have declined by 14.2% (at 37,105 units), a decrease of 6,137 units. Export sales are also substantially down, with a 19.1% year-on-year drop-off. Last month, only 24,235 units were exported — 5,712 fewer units than a year ago.

Out of the total reported industry sales of 37,105 vehicles, 33,191 units, or 89.4%, were dealer sales, 4.5% were to the vehicle rental industry, 3.1% to industry corporate fleets and 3% to the government. 

The May 2024 new passenger car market had contracted by 3,212 vehicles (selling 24,367 units, which is an 11.7% YoY loss. Domestic sales of new light commercial vehicles, bakkies and minibuses were down by 2,498 units (to 10,334) for the month, a 19.5% loss. 

The medium and heavy truck segments were also weak, selling 7.3% fewer. 

It’s the ninth decline in 10 months.

Naamsa attributes the decline in sales to national election jitters, which would have reduced appetite for big-ticket items such as vehicles, along with an additional public holiday during the month. 

It welcomed a second consecutive full month of no rolling blackouts, adding that oil prices had remained relatively low due to sluggish demand in the global markets, which support the manufacturing industry. 

“The South African Reserve Bank (has) held interest rates unchanged for the sixth consecutive meeting, but now saw inflation only stabilising at its mid-point of 4.5% in the second quarter of 2025.

“While this is of some comfort to indebted consumers, the high lending rate combined with high inflation and relatively lower household income, will continue to negatively impact the new vehicle market. 

“Once the rand exchange rate, consumer price inflation and fuel prices are under control, it will stimulate the whole economy and also the demand for new vehicles.” 

Last month, Naamsa celebrated a sharp quarterly increase in sales of new energy vehicles (NEVs). A total of 3,042 NEVs were sold in the first quarter of 2024, which is up by 82.7% from the 1,665 units sold in the same period last year. 

In December 2022, the new vehicle market registered its 12th consecutive month of YoY growth. Sales have nosedived this year, caused by strained consumer finances, high vehicle prices and economic uncertainty. 

The overall trend is downward, and experts predict a challenging year for the South African vehicle industry. DM

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