South African new-vehicle sales returns to first-quarter levels with June sales once again moving above the 40,000-unit threshold

South African new-vehicle sales are back to where they were in the first quarter, with June sales once more surpassing the 40,000-unit mark. After further dismal sales in April and May, the outcome will have given the market some comfort and allowed for higher growth year over year.

The Automotive Business Council (according to naamsa) reports that new car sales increased by 7.6 percent in June to 41,019 units. Although it indicated a gradual recovery in sales following the April downturn, it is still far behind the strong showings of February and, in particular, March sales.

“The new vehicle market remains volatile for many reasons, most of these beyond the control of manufacturers,” said Lebogang Gaoaketse, Head of Marketing and Communications at WesBank. “There are well-known pandemic-related consequences that continue to impact market performance. Additionally, broader challenges facing the country over the past few months have compounded the recovery of new vehicle sales.”

WesBank is referring to the recent state of the energy grid, which will unavoidably have an impact on consumer and business confidence over the coming months, as well as the natural disasters that have affected production and logistics, particularly in KwaZulu-Natal; the ongoing global supply constraints, not only of new vehicle stock but also of parts; and the economic factors that have an impact on affordability, such as rising interest rates and fuel prices.

“The market is unpredictable, suffice to say that it appears demand remains higher than the market is able to deliver,” says Gaoaketse.

The majority of that demand was transferred into passenger car sales, which increased 20.6 percent to 29,545 units in June compared to the same month last year. The segment’s dealer performance was even better, increasing 21.6 percent to take 83.6% of sales (24,709 units), showing robust consumer demand. Sales of rental cars totaling 3,295 units—up 26.7 percent from June of last year—also helped to boost the entire passenger car market.

Light Commercial Vehicle (LCV) sales, on the other hand, decreased by 20.8 percent to 8,877 units, with dealers suffering a worse decline of 25 percent.

As a result, first-half sales totaled 253,442 units, a significant rise of 11.4 percent over the same period in 2021. “While we should celebrate this recovery of new vehicle sales, this performance must be considered within the context of more stringent COVID-19 regulations during the first half of last year,” says Gaoaketse. “Based on similar performance during the second half of the year, it is possible to see a South African new vehicle market exceed 500,000 units this year.”

Watch the analysis here: https://youtu.be/KeFHCYkMs5I