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March stats show interest rate hikes’ effect on new vehicle sales

Home Manufacturing & Processing Automotive March stats show interest rate hikes’ effect on new vehicle sales

THE Automotive Business Council said that the South African Reserve Bank (SARB) rep rate increase by 50-basis points to 7,75% and the prime lending rate higher at 11,25%, is already having an impact on a shrinking disposable income purse many consumers rely on when making new vehicle purchase decisions.

Reflecting on the March 2023 vehicle sales, naamsa CEO, Mikel Mabasa said for many South African households, buying a brand-new car is the second most- important investment. The perceived continued increase in interest rates would likely have a negative impact on the already severely financially constrained consumers’ affordability to purchase vehicles and/or to service their car loan repayments.

For the period under review, aggregate domestic new vehicle sales, recorded at 50,157 units reflected a decline of 308 units, or 0,6%, from the 50,465 new vehicles sold in March 2022. Overall, out of the total reported industry sales of 50,157 vehicles, an estimated 43,801 units or 87,3% represented dealer sales, an estimated 6,1% represented sales to the vehicle rental industry, 4,1% to government, and 2,5% to industry corporate fleet.

Sales by segment

For vehicle segmentation, the March 2023 new passenger car market at 31,631 units registered a decline of 2,157 cars, or 6,4%, compared to the 33,788 new passenger cars sold in March 2022. The car dealer industry supported the new passenger car market for March 2023 and accounted for 85,9% of sales. Domestic sales of new light commercial vehicles, bakkies and minibuses at 15,529 units during March 2023, had increased by 1,556 units, or 11,1%, from the 13,973 light commercial vehicles sold during March 2022.

Sales for medium and heavy truck segments of the industry reflected a good performance for March 2023, recorded at 870 units and 2,127 units, respectively, which is an increase of 80 units, or 10,1% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses an increase 213 vehicles, or 11,1%, compared to the corresponding month last year. For the year-to-date vehicle statistics, the domestic vehicle sales for March 2023, at 139,437 units, recorded an increase of 3,245 units, or 2,4% compared to the same period last year. In terms of the month-on-month comparison, March 2023 increased by 4,959 units or 10,9% compared to 45,198 new vehicle sales units recorded for February 2023.

The export sales recorded an increase of 1,026 units, or 3,1% to 34,134 units in March 2023 compared to the 33,108 vehicles exported in March of last year. The year-to-date vehicle exports recorded at 84,774 units were 4,2% below the level of the corresponding period 2022, recorded at 88,363 units. The month-on-month export sales reflected an increase of 3,922 units or 12,9% for March 2023 at 34,134 units, compared to the 30,212 export vehicle units recorded for February 2023.

Notwithstanding the geographical disparities in the global pace of New Energy Vehicles transformation, the SA automotive industry, like all other car production markets globally is currently undergoing an exciting industry re-invention and transformation cycle marked by carbon neutrality goals, cutting-edge technology, and an electrified propulsion moment for transportation. The following table summarises the New Energy Vehicles annual aggregate industry sales in SA by market for the past 5 years, including YTD February 2023:

While vehicle production is ramping up and the overall performance of vehicle sales and export sales has been steadily increasing, the continued monetary policy tightening, domestic and global slowing growth, as well as energy shortages will have greater spillover to the overall performance of the industry. With this being said, naamsa remains upbeat that our forecast for domestic sales will grow by 6,3% (at 563,000 units) for 2023 and export sales will grow by 8,3% (380,900 units)

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