A continuous flow of new and updated models, particularly in high-volume selling segments, along with the improved availability of popular models, all appear to be sustaining the growth of new-vehicle sales in South Africa, says National Automobile Dealers’ Association director Gary McCraw.
Another positive is the overall enhanced supply of new vehicles, which serves to foster competition among the various brands in the local market.
Also, buyers, many of whom have been waiting for their vehicle-of-choice for quite some time, are benefitting from a number of aggressive sales assistance programmes.
"It is indeed pleasing to observe that the total market reached 46 810 units in June, representing a remarkable 14% increase compared to the same month last year,” says McCraw.
However, it is important to note that a year ago, the Toyota plant in Durban was shuttered owing to flood damage, which had a significant impact on overall sales volume.
“Nevertheless, witnessing continued growth in the current challenging economic environment is encouraging, given that vehicle buyers are facing affordability pressures, a depreciating rand that drives prices higher, low business confidence, and political instability,” notes McCraw.
Fortunately, consumer inflation slowed to 6.8% in April, marking the lowest rate since May last year, he adds.
Additionally, the decreased frequency of power outages has provided a general morale boost.
"Generally, sentiment towards making major purchases remains slightly negative in South Africa, as consumers grapple with the effects of high interest rates.
“Looking ahead, if we can maintain the current rate of power outages, continue to experience a drop in inflation, and benefit from the recent relief in petrol prices, sentiment may gradually improve,” says McCraw.
“This, in turn, could lead to increased dealer sales as more new models become available.”
Counter Cyclical
New-vehicle sales in June impressed with double-digit growth to record the second-best sales month this year, says WesBank.
“South Africa’s new-vehicle market is almost counter-cyclical, displaying reassuring levels of growth that outperform most sectors of the economy,” notes WesBank marketing and communications head Lebo Gaoaketse.
Year-to-date sales are up 4.8% to 265 824 units.
“There is hope for better news for the economy and consumers during the second half of the year,” says Gaoaketse.
“More stable fuel prices, hopefully fewer, if any interest rate changes, first-half growth for the manufacturing sector, as well as a strong recovery in exchange rates, will all contribute to the economic performance as a whole during the second half, as well as improved affordability for consumers who are in the market for a new vehicle.”