Even when some isolated indicators have grown, the new vehicle market still has to recover from the effects of the pandemic, inflation and stock shortage. Still, specialists consider the overall picture shows good news for the industry and dealers.
The automotive industry is one of the most important manufacturing sectors, not only locally but also globally considered. 60 million cars -or other kinds of vehicles- are produced per year, employing 4 million people around the globe, or even more when indirect business employers are included.
Nonetheless, this area is still dealing with the effects of several years of decrease as the market dropped by 0.6% between 2017 and 2022, according to global data.
Regarding the South African market, some positive rates have started to appear. According to Naamsa, an automotive business council, October car sales, for example, have increased to 45,966 units compared to the sales registered in the same month last year. This represents 11.4% growth.
Obviously, this rate isn’t enough to say that the market has fully recovered. As it was explained by the head of marketing and communication at WesBank, Lebogang Gaoaketse, “while this performance in isolation continues to be reassuring to South Africa’s new vehicle market, it needs to be considered in terms of the performance for the rest of 2022 and the easing off of market activity year-to-date”.
The fact is that, despite the mentioned growth, monthly sales were 3.8 percent lower than September’s sales. Consequently, the year-to-date market performance decreased to 13.1% in comparison with the year-to-September figure of 13.4%.
The citizen’s budgets also influence the rates of the industry
The market behaviour is affected by several aspects that confluence, such as logistic activity, stock availability or even the year seasons. Still, the household economy continues to be one of the main elements that define a market performance. In this respect, rising inflation has led to the average consumer seeking ways to cut costs.
Actually, several car expenses have risen even beyond inflation rates, such as fuel prices or car insurance quotes. Then, many motorists are looking for affordable cars with economical fuel consumption and reasonable maintenance costs. It is not something easy to reach, considering the fact that, at the current market, only 11 new cars can be bought for under R200,000.
In the words of Gaoaketse: “with the rise in interest rates last month and the economic outlook provided by the mid-term budget, South African consumers are faced with a balancing act of affordability versus a growing need to replace their vehicles, a decision largely delayed over the past two years given the pandemic. It provides a cauldron of opportunity for the motor industry to meet the needs of motorists”.
From a positive point of view, it must be said that new car sales have overcome the 400,000 mark, at least by some margin. Some analysts also consider that a vehicle market of 500,000 units for the year could be possible.