02 May 2023: The potential for new vehicle sales remains throttled by general economic uncertainty, rising interest rates, and inflationary pressures that are increasing the burden of household budgets.
Commenting on April new vehicle sales, Lebo Gaoaketse, Head of Marketing and Communication at WesBank said the latent demand for vehicle replacements exists, but the willingness to commit limits ultimate sales.
“Applications for new vehicle finance at WesBank increased over 9% year-on-year, yet market sales remained flat during April,” said Gaoaketse.
According to numbers released by naamsa | the Automotive Business Council, April sales were 0.2% down to 37,107 units compared to the same month last year. “Given there was one more selling day in the month – interrupted by public holidays and long weekends – than the similarly disrupted April last year, the performance is even more lackluster,” says Gaoaketse. “However, the harsh realisation of the impact is this volume of 13,007 units less than new vehicles sold during March.”
Gaoaketse also notes that the demand for vehicle finance is predominantly in the new vehicle market and not for pre-owned cars and bakkies. “Applications for finance of used vehicles – albeit twice the volume of new vehicles – was unchanged year-on-year in the bank’s book,” said Gaoaketse. “Additionally, a year ago, pre-owned finance applications were approximately 5% down.”
Passenger cars weathered the market the worst, declining 6.1% year-on-year to 24,174 units. Dealers retailed 21,528 of those off showroom floors. The rental market was expectedly depressed given the short sales month, buying 1,493 cars during April.
Light Commercial Vehicle sales were 11% up to 10,611 units. The dealers also fared better, their sales up 7.1% in the segment as new products continued to generate consumer interest.
“With a further interest rate hike expected during May in an effort to curb high inflation, the impacts that are throttling the market should be expected to continue for some time,” says Gaoaketse. “Consumers should be carefully considering their vehicle requirements within their affordability to manage their budgets – and responsibly limit their indebtedness.”