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Figures released by the National Association of Automobile Manufacturers of SA reveal a significant downturn in new vehicle sales for March, compared to the same period last year.
According to Wesbank, two major factors contributed to this decline, with new vehicle sales plummeting by 11.7% to 44 273 units.
Despite this decline, Wesbank notes that March sales were impacted by a shorter selling period due to the early Easter holidays, with March 2024 having only 20 selling days compared to 22 days in March last year.
This calendar impact, combined with other market dynamics, resulted in a challenging sales environment for the automotive industry.
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Lebo Gaoaketse, head of marketing and communication at Wesbank, remains cautiously optimistic about the upcoming months.
Gaoaketse acknowledges the potential for April to bounce back and offset some of the losses from March.
He points out that despite the year-to-date sales being down by 5.3% compared to last year, there are indications of sustained demand, as reflected in the increased rate of finance applications per day compared to March last year.
Examining historical sales data, Wesbank highlights March 2023 as the best-selling month of last year, with 50 114 units sold.
It notes that the exceptional performance, however, creates a skewed comparison when analysing March 2024 sales, especially considering that April historically records lower sales due to public holidays.
Wesbank numbers for March reveal an interesting trend in finance applications.
Brandon Cohen, the chairperson of the National Automobile Dealer's Association, corroborates this trend, noting a multifaceted shift in consumer behaviour.
Cohen explains that consumers are not only transitioning from new vehicles to used vehicles but also exploring alternatives such as Chinese brands and downsizing to smaller vehicles.
Cohen said:
However, Cohen also raises concerns about the potential impact of rising expenses, particularly driven by high interest rates.
He notes that while interest rates have historically influenced purchasing decisions, the current economic climate, marked by high inflation and fuel price hikes, is putting additional pressure on household budgets and consumer spending.
Cohen emphasises that if these trends persist, there could be upward pressure on secondhand vehicle prices in the future.
He explains that the surge in secondhand car pricing we saw during Covid has stabilised but warns of a potential price increase if demand continues to outstrip supply.
Looking ahead, Wesbank and Cohen anticipate a cautious approach from both consumers and the market, especially with pending elections in May.
READ: South Africans stay loyal to Toyota and Ford, as auto industry limps to recovery
The combination of unchanged high interest rates, inflationary pressures, and uncertain economic conditions is expected to dampen first-half performance in the automotive sector.
