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Welcome back to the real world. After annual growth of 22% and 13.9% in 2021 and 2022 from the depths of the Covid crash, new vehicle sales are positively snail-like in 2023. Figures released last week by Naamsa show that after two months of the year, sales of cars and commercial vehicles, at 89,434, were 4.3% ahead of the 85,727 at the same stage of 2022.
Not to worry, says WesBank marketing head Lebogang Gaoaketse. We must get used to “smaller increments” of growth now that the market has returned to something like normality. “This shouldn’t necessarily be construed as poorer performance from the market, but rather more realistic growth that can be expected as the market continues its recovery.”
He adds: “It remains positive for the market to have recovered volumes to this level, especially given the external constraints over the past few years.” Consumer demand, as measured by credit applications, “provides a solid foundation off which the market can continue its recovery”.
As I’ve written before, the “normality” Gaoaketse refers to is a sad reflection of where the market used to be. Still, given the miserable state of the economy, and low levels of business and consumer confidence, the motor industry can be grateful for any improvement.
How much is it likely to be? In January, Toyota South Africa president Andrew Kirby forecast full-year market growth of 7.8%. That would raise the market to 576,000 from last year’s 528,963. Naamsa CEO Mikel Mabasa thinks 6.3%, or 563,000.
Cyril Zhungu, Standard Bank’s head of automotive retail finance, comes in even lower, at 5%, or about 550,000. All three would take the market safely back above 2019’s pre-Covid 536,612 — but still a long way from historic highs.
Zhungu says inflationary pressures are likely to increase new vehicle prices and lower demand, particularly for high-priced cars. He expects most growth in the R350,000-R500,000 range.
He says: “Affordability for private consumers will remain the key consideration for any vehicle purchase decisions, with more customers expected to either hold on to their vehicles for longer or shift further to lower-priced models and opt for pre-owned units. The consumer vehicle purchase decisions will be driven by more practical considerations than aspiration.”
Mark Dommisse, chair of the National Automobile Dealers’ Association, is steering well clear of the forecast game. Beyond asserting that there is still growth potential, he says it is “quite difficult to predict how the new vehicle market will play out”.
One can understand his reticence. On top of further rises in interest rates and fuel prices, figures released this week have reinforced the fact that load-shedding is hammering economic growth prospects.
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