The industry is still trending downward, but recovery may be on the way.

The recent downward trend in new vehicle sales continued into October 2023, with the third consecutive month showing negative year-on-year growth

With persisting economic strain on consumers, and pressure on businesses to remain operational in the face of the increasing cost of living and restrictive borrowing costs, October 2023 saw the third consecutive month of decline in South African new vehicle sales. It was also the fifth month in 2023 that recorded lower year-on-year sales, reflecting the difficulties currently facing the local vehicle market.

Passenger cars and light commercial vehicle sales are struggling

Passenger cars again took a particularly noteworthy hit, with 1,068 fewer new vehicles sold in comparison to the same month in 2022 for a total of 21,912 units. This negative growth equates to a sales volume loss of 3.5%, and closely mirrors the decline in October’s light commercial vehicle sales.

The best-selling vehicles in South Africa in October 2023.

Sales of bakkies, vans and minibuses contracted by 3.0% year-on-year, with 387 fewer new units sold than in October 2022. These two sectors played the largest parts in the aggregate new vehicle sales decline of 2.0% in comparison to last October.

Medium- and heavy commercial vehicles are doing better

Medium commercial vehicles sold better this October than they did last year, with a volume increase of 8.3% or 62 units. Heavy trucks and buses also sold much better in October 2023, with a gain of 26.0% or 488 total units over their numbers from October 2022.

Medium- and heavy commercial sales saw decent gains in October 2023

Exports are rebounding and the overall market is improving

It’s not all doom and gloom in October 2023’s sales figures, however. Vehicle exports saw an increase of 11,411 vehicles or 39.5% over the same month last year, and exports for the year to date is currently 12.7% ahead of the same period in 2022.

This improvement could however partly be ascribed to the Transnet strike in 2022, which severely hampered the ability of local factories to source components and made it difficult to get their products to the docks and onto cargo ships.

Vehicle exports from South Africa are gaining momentum, but continued government lethargy regarding NEVs will likely reverse this trend.

It is worth considering that our new vehicle market is still recovering from the impact of the 2020 pandemic, but is on track to match its pre-pandemic level by the end of 2023. The South African new vehicle market as a whole appears to be looking up, with a 2.1% increase year-to-date when compared to the first ten months of 2022.

Total sales in the 12-month period from November 2022 to October 2023 also improved 4.1% compared to the period from November 2021 to October 2022. “This is a healthy 9,027 more new vehicles sold so far this year than 2022, which remains a positive step in the market’s recovery”, says Lebo Gaoaketse, Head of Marketing and Communication at WesBank.

Lack of governmental commitment hampers confidence

Local manufacturers are sadly currently suspended in limbo, thanks to indecisive governmental policies. In the Medium-Term Budget Policy Statement issued on November 1, Enoch Godongwana, SA’s Minister of Finance, announced that government’s NEV plans will only be revealed by the National Treasury in February 2024. This is an unnecessary delay, because the local industry needs forward-looking plans regarding transitioning the local manufacturing industry to export-friendly NEVs (New Energy Vehicles).

According to Mikel Mabasa, CEO of naamsa: “We expected more from the Minister yesterday after numerous engagements we had with Government on this topic leading to the budget announcement. Government understands our challenges as a vehicle producing country with bigger ambitions to grow our global influence as we move to NEVs. Effectively, the Minister has bought himself more time to announce details for NEV policy which will now be during the 2024 Budget Review with considerations to domestic market demand stimulus measures, establishment of renewable energy-based charging infrastructure, and production support.”

The lack of government guidance regarding NEVs will hamper development in this area and effectively destroy export opportunities.

NEV policy clarity is urgently needed

This is a particular sticking point, as local interest in NEVs is increasing at a steady rate, while many of the South African motor manufacturing sector’s current export markets are moving towards electrification as well. This uncertainty regarding NEVs is keeping our manufacturers on the back foot, leaving them unsure about future investment planning and marketing strategies.

Mabasa takes a very clear view of this issue: “South Africa has procrastinated far too long, and we believe that the NEV policy pronouncement should be made by President Cyril Ramaphosa during his State of the Nation Address and supported by fiscal measures the Minister of Finance promised to announce in the 2024 National Budget Review. This is crunch-time for the South African automotive industry, and we can no longer afford to be silent on policy choices the country should make about the future of this important sector in the economic life of South Africa and her people.”

Martin Pretorius