A man walks past a car dealership with car prices displayed in Johannesburg, South Africa . Photo: Reuters
South Africa’s domestic sales reached their highest monthly total of the year in October, while exports continued to decline sharply.
This was according to naamsa | The Automotive Business Council's latest vehicle sales statistics released on Friday.
According to naamsa’s data, aggregate domestic new vehicle sales for October 2024 reached 47942 units, a 5.5% increase over the 45418 vehicles sold in October 2023. This increase of 2506 units was largely driven by strong passenger car sales, marking October as the highest passenger car sales month since October 2019.
naamsa CEO Mikel Mabasa, said, “This positive start to the last quarter is encouraging for the medium-term outlook of the new vehicle market.”
However, export sales dropped by 42.6%, or 17324 units, down to 23342 from 40666 units the prior year. For the first 10 months of the year, vehicle exports were now 23.1% below the corresponding period 2023.
Mabasa attributed this decline in part to a “model change by a major local OEM, stricter emissions regulations in Europe, and an influx of lower-cost electric vehicles from China.”
Breaking down the domestic sales, Mabasa reported that “out of the total reported industry sales of 47924 vehicles, an estimated 80.4% represented dealer sales, while 14.8% were sales to the vehicle rental industry, 2.6% to corporate fleets, and 2.2% to government.”
The October 2024 passenger car segment saw strong growth, with 34228 units sold, a 14.5% increase over the 29897 new cars sold in October 2023. Car rental companies played a notable role, accounting for 19.8% of passenger car sales, according to naamsa’s figures.
However, not all segments experienced growth. Domestic sales of new light commercial vehicles, such as bakkies and minibuses, dropped by 12.7% to 10791 units, down from 12367 units in October 2023. The medium and heavy truck segments also recorded a drop, with medium commercial vehicles down by 10.1% and heavy trucks and buses down by 7.1% compared to the corresponding period the previous year.
Despite the challenges, Mabasa said a combination of macroeconomic factors that could provide relief to consumers and stimulate sales in the coming months.
He said the stronger performance in the new vehicle market in October 2024 and, in particular, the volume passenger car segment reflecting its highest monthly growth over the past five years, bodes well for signs of the new vehicle market slowly turning
“Passenger cars sales represent a key indicator of consumer sentiment,” he said. With consumer inflation easing for the fourth consecutive month to 3.8% in September and petrol prices at their lowest in nearly three years, Mabasa said households might begin to feel “some breathing space.”
Looking ahead, Mabasa noted the potential impact of an anticipated interest rate cut over the next 18 months could gradually ease the financial burden on consumers and businesses.
He said, “Although the immediate effects of these positive signs are still relatively small, the cumulative impact and momentum going forward would hopefully translate into stronger new vehicle sales in the medium to long term.”
However, the export challenges remain, especially with Europe being South Africa’s top vehicle export destination.
Mabasa said the European market has shown sluggish growth, with the EU’s economic growth rate at 0.3% over the first three quarters of 2024 and Germany projected to close the year with a 0.2% contraction. The changing market landscape, including emissions regulations and competition from Chinese electric vehicles, is expected to keep export growth limited in the near term.
However, Mabasa said, “An easing of monetary policy in key export markets could see the vehicle export momentum turn positive again over the medium term.”
BUSINESS REPORT