Rising interest rates and worsening power cuts have slowed the momentum of new vehicle sales growth in South Africa as load shedding hits production, while rising interest rates impact purchasing power.
This comes as aggregate domestic new vehicle sales in September recorded a 10.8% increase at 47 786 units, from the 43 147 vehicles sold in September, 2021.
The September print reflected a year-on-year increase of 4 639 units, and a slight monthly increase of 366 units from 47 420 vehicles sold in August.
The Automotive Business Council (Naamsa) yesterday said the new vehicle market continued to reflect a healthy performance, but the pace of recovery has started to slow down.
Naamsa pointed to the despondency about load shedding and other weakening economic indicators for this slowing momentum.
Naamsa CEO Mikel Mabasa said the higher stages of load shedding seem to have had an amplified negative impact on production and the South African economy as a whole.
The South African Reserve Bank (Sarb), at its September Monetary Policy Committee, noted that economic and financial conditions were expected to remain more volatile for the foreseeable future and revised its economic growth outlook lower for 2022.
The Sarb also hiked its benchmark interest rates by a further 75 basis points, from 5.5% to 6.25% per annum, exerting additional pressure on already struggling consumers.
Mabasa said the new vehicle market’s resilient performance continued during the month, but at a slower pace, amid the sixth consecutive increase in interest rates since November, 2021.
“However, in all this despondency there is some good news for motorists as the oil price has dropped to its lowest level since January, 2022 with the petrol price set to reduce further in October, 2022 easing some cost pressures in a depressed economy,” Mabasa said.
“The new vehicle market’s performance for the year-to-date is still 13.4% ahead compared to the corresponding period 2021 but the pace of growth being experienced in the market is expected to slow down for the balance of the year.”
Overall, an estimated 39 152 units or 81.9% represented dealer sales; an estimated 14.2% represented sales to the vehicle rental industry; 2.3% sales to the government; and 1.6% to industry corporate fleets.
Export sales recorded a huge increase of 21 199 units or 104.6% to 41 474 units in September compared to 20 275 vehicles exported in the same month last year.
Naamsa said the strong performance in vehicle exports during the month could still be attributed to the knock-on effects of the cyberattack on Transnet’s operations during September, 2021.
Naamsa said the global economy has entered a period of persistently high inflation and weaker economic growth, impacting demand. “But growth prospects for domestic vehicle exports remain optimistic on the back of new locally manufactured model introductions during the last quarter of the year,” it said.
BUSINESS REPORT