New vehicle sales increased 1.5% to 44 229 units in July, an increase that could be the turning point for a better second half of the year. Photo: File
New vehicle sales increased 1.5% to 44 229 units in July, an increase that could be the turning point for a better second half of the year, Naamsa | the Automotive Business Council said yesterday.
Export sales, which are crucial to keep the local vehicle manufacturing industry financially viable, however, decreased sharply by 12 671 units, or 33.2%, to 25 461 units in July.
New vehicle sales have fallen every month to July this year bar April, where it increased by only 2.2% compared with April 2023. July’s new passenger car sales at 29 934 units increased by 1 894 cars, or by 6.8% compared with the same month in 2023.
Lebo Gaoaketse, the head of marketing at WesBank, said the uptick in new vehicle sales was off the back of marginally improving economic conditions, returning consumer and business confidence in the wake of four months of consistent electricity supply, and the hope of some budget relief for consumers during the second half.
“The return of some confidence into the market is reflected in demand as measured by WesBank’s rate of applications. Hopefully, this continues to translate into more optimism for the second half,” said Gaoaketse.
Naamsa said the lower exports were due to adverse weather conditions during the month and declining exports to Europe, the domestic automotive industry’s top export region. The eurozone gross domestic product (GDP) grew by only 0.3% in the second quarter, with Germany’s GDP contracting by 0.1%.
“The direction and performance of vehicle exports for the balance of 2024 will remain linked to central banks’ gradual monetary easing in major markets,” Naamsa said in a statement. Year to date, vehicle exports were now 13.5% below the same period in 2023.
Overall, out of the total reported industry sales, an estimated 35 853 units, or 81.1%, represented dealer sales, 13.5% were sales to the vehicle rental industry, 2.9% to government, and 2.5% to corporate fleets.
Car rental sales accounted for 17.1% of new passenger vehicle sales during the month. Domestic sales of new light commercial vehicles, bakkies and minibuses at 11 554 units fell by 1 112 units, or a loss of 8.8%.
Sales for medium and heavy truck segments by 6.6% and by 3.7%, respectively, compared to the sales in July 2023.
Naamsa said that in anticipation of improved economic prospects during the second half, the new vehicle market responded positively during July.
Although new vehicle sales for the year to date were 6.3% below the same period 2023, and despite various challenges and elements of economic uncertainty, new vehicle products continued to be launched.
“Encouraging aspects for growth and increased consumer spending for the balance of the year include four consecutive months of no load shedding, a stronger rand exchange rate, and potentially up to two interest rate cuts before year-end,” Naamsa said.
Positively, the Absa Purchasing Managers’ Index tracking expected business conditions in six months’ time, increased to 69.4 points in July from 68.1 in June. “This is the most optimistic respondents have been about business conditions going forward since early 2022,” Naamsa said.
BUSINESS REPORT