Who’d be a motor industry analyst? Halfway through 2023, and it’s still not clear what direction the new vehicle market is taking. Gravity-defying demand has some experts predicting a bigger market than expected. On the other hand, Toyota South Africa’s sales and marketing head, Leon Theron, said recently that the company was reducing its January forecast of a 570,000-plus full-year market.
June’s sales figures, published this week by Naamsa, once again exceeded most expectations. A market of 46,810 cars and commercial vehicles was 14% higher than the 441,052 of June 2022.
That’s good, right? Well, yes and no. To put the growth in perspective, Toyota’s Durban assembly plant was still closed in June last year because of floods a few weeks earlier. The market leader sold fewer than 7,500 vehicles, less than half what it sold before the floods.
This time round, Toyota sold 13,016 vehicles last month — 27.6% of the total market and more than twice as many as its closest competitor.
The upshot is that at the midway point of 2023, the industry has sold 265,824 vehicles to South African customers — 173,943 cars, 76,519 bakkies and minibuses, 3,895 medium-sized trucks, 2,587 heavy trucks, 8,577 extra-heavies and 303 buses.
That’s 4.8% more than the 253,540 at the same stage last year. That growth is all coming from commercial vehicles, for while bakkies and nearly all categories of trucks are well ahead of last year, cars are 1.3% behind.
That hasn’t deflated the enthusiasm of dealers, who are just glad it’s not worse. National Automobile Dealers’ Association director Gary McCraw says recent market gains are underpinned by “a consistent stream of new and updated models, particularly in significant high-volume segments, along with improved availability of popular models”.
Cyril Zhungu, Standard Bank’s head of automotive retail finance, says the situation has also been eased by the “agile” response of motor companies in introducing cheaper models to a cash-strapped market. Then there’s the fact that price inflation is rising faster on used vehicles than on new ones.
Standard Bank is sticking to its 5% forecast for new vehicle sales growth this year. That would take the market to just over 556,000
So can this market resilience continue? Despite Naamsa CEO Mikel Mabasa pointing to the continued challenges of inflation, rising interest rates, a weak rand, load-shedding and low levels of business and consumer confidence, finance house WesBank wonders if the situation is as bad as it looks.
It says: “Some economists have argued that the economy is in a far healthier state than the broad perception might give it credit for. The country’s ability to have displayed any growth at all during the first half of the year in the face of some of the worst levels of rolling blackouts [it] has experienced is firm evidence of this. Perhaps the same holds true for South Africa’s new vehicle market.”
Marketing head Lebo Gaoaketse says there is real hope of “better news” for the economy and consumers in the second half of the year. “More stable fuel prices, hopefully fewer, if any, interest rate changes, first-half growth for the manufacturing sector as well as a strong recovery in exchange rates will all contribute to economic performance as a whole during the second half, as well as affordability for consumers in the market for a new vehicle.”
Zhungu isn’t convinced. He says the full impact of successive increases in the prime rate this year hasn’t been felt yet in the new vehicle market. Historically, increases take three to six months before their impact is seen. “This remains a realistic headwind which, together with the impact of higher administered prices, may lower the traditionally higher sales in the second half of the calendar year.”
Standard Bank, he says, is sticking to its 5% forecast for new vehicle sales growth this year. That would take the market to just over 556,000, from 529,562 in 2022.
Amid all this uncertainty, industry CEOs were able to briefly leave behind their worries last week to celebrate the 50th anniversary of BMW Group South Africa at a banquet in Joburg. When it was established in 1973, the assembly plant in Rosslyn, Tshwane, was the first BMW plant outside Germany.
The celebration coincided with an announcement that BMW Germany is investing R4.2bn in Rosslyn, so it can build the next generation of the X3, an SUV it started manufacturing in 2018. The new version will include a plug-in hybrid-electric, the first such vehicle to come out of Rosslyn. The plant, which will also make petrol and diesel X3s, will be the only one in the world to make the plug-in hybrid.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.