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The National Association of Automobile Manufacturers of South Africa’s (Naamsa) New Vehicle Sales stats for January 2023 show a year-on-year increase of only 4.8% – starting the year off on a positive but weak note amid the plight of load shedding.
The automotive industry contributes 4.3% to South Africa’s GDP. However, the export of vehicles and automotive components recorded a year-on-year decrease of 1.8% to 20,536 units in January 2023 compared to the 20,903 vehicles exported in January 2022.
According to the association, domestic sales of new light commercial vehicles, bakkies and mini-buses recorded an increase of 998 units from the 9,624 vehicles sold in January 2022 – representing a year-on-year increase of 10.4%.
Sales for the industry’s medium and heavy truck segments also reflected a positive performance during the month, at 461 units and 1,354 units, respectively.
Medium commercial vehicles showed an increase of 13 units sold, while heavy trucks and buses had an increase of 122 vehicles, representing a year-on-year increase of only 2.9% and 9.9%, respectively.
The total reported industry sales of 43,509 vehicles comprise dealer sales, rental industry sales, and sales to government and industry corporate fleets.
The breakdown of these four segments is as follows:
- Dealers represented 83.6% of sales, with an estimated 36,353 units sold.
- The rental industry represented 12.1% of sales.
- Government sales represented 2.2% of sales.
- Industry corporate fleets represented 2.1% of sales.
Market forecast
Despite the majority of the number being positive for January 2023, the weak performance of the new vehicle market is in line with expectations of a depressed economy along with ongoing structural problems and cost of living increases, said Naamsa.
“The same challenges confronting the economy and the automotive industry in 2022 – such as persistent load shedding, high inflation and interest rates, and currency depreciation – have been carried over into 2023,” it said.
Naamsa added that there is a close correlation between new vehicle sales and the country’s GDP growth rate, and the adjusted GDP growth rate of only 0.3% for 2023 is a warning sign for the motor industry.
The association also expressed grave concern about the current load shedding schedule. It confirmed that January 2023 was by far the worst month in terms of the cumulative amount of load shedding the country has ever experienced in a period of a month.
“Undoubtedly, the destructive higher stages of load shedding have amplified the negative impact on South Africa’s vehicle production and component manufacturing.
“Load shedding is the biggest inhibitor to drive the industry’s localisation ambitions, create sustainable jobs within the auto sector and to further attract investment opportunities into the country to grow the South African economy,” said Naasa CEO Mikel Mabasa.
Despite the unpredictability in the new vehicle market, Naamsa noted that sales should still exceed the pre-Covid-19 level in 2023.
It added that although vehicle exports performed weaker in January 2023 compared to the corresponding month in 2022, the momentum in exports remains upward.
Another positive sign is the signal that the European economy may avoid near-term recession, while the re-opening of the Chinese economy would provide a further boost to global demand in general, said Naamsa.
Prospects for vehicle export growth also remain optimistic regarding further new model introductions by major exporters in the domestic market in 2023.
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