01 August 2024: New vehicle sales received a long-awaited injection of positivity in July, showing growth effectively for the first time in nearly a year.
According to data released by naamsa | the Automotive Business Council, the South African new vehicle market grew 1,5% year-on-year to 44,229 units. July sales were only the second month after April to show any growth since July 2023.
The performance comes off the back of marginally improving economic conditions, returning consumer and business confidence in the wake of four months of consistent electricity supply, and the hope of some budget relief for consumers during the second half.
South African motorists continue to remain under immense budget pressures amid interest rates at a 15-year high. And there isn’t much relief expected soon. “Whilst soft economic growth and inflation data indicate the real possibility now for interest rate cuts, with only two opportunities in September and November, consumers shouldn’t expect big savings to become a reality this year,” says Lebo Gaoaketse, Head of Marketing and Communication at WesBank.
Most economist outlooks predict a slow cut in rates from the South African Reserve Bank, which will continue to place pressure on indebted consumers and dampen propensity for new purchase decisions.
“The market’s performance during July should be seen in two important contexts,” says Gaoaketse. “Firstly, July 2023 was practically the last month the South African car market was in positive growth territory, making this July’s performance relatively stronger. Secondly, July sales were a substantial 4,157 higher than June, which is significantly more than the 657-unit growth year-on-year.”
In fact, July new vehicle sales were only 520 units shy of being 2024’s best sales month, February recording 44,749 units as the best.
The market growth was driven by the Passenger Car segment, up 6,8% year-on-year to 29,934 units. Light Commercial Vehicles by contrast, were down 8,8% to 11,554 sales. The growth in July has reduced the year-to-date market decline to 6,3% at 289,982 units. By this time last year, the market had surpassed the 300,000-unit volume.
“The return of some confidence into the market is reflected in demand as measured by WesBank’s rate of applications,” says Gaoaketse, which had returned to growth after two months of year-on-year declines. “Hopefully, this continues to translate into more optimism for the second half.”
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