Personal Finance & Motoring Explored
How much can people afford to spend on a car in South Africa right now given the rising inflation and running costs?
Data from the automotive business council Naamsa shows that new vehicle sales in South Africa grew 7.6% during June 2022, to 41,019 units.
Naamsa said that the new vehicle market’s performance was inspiring considering ever-increasing challenging market conditions. Aggregate domestic new vehicle sales in June 2022, reflected an increase of 2,888 units, or 7.6%, from the 38,131 vehicles sold in June 2021.
The result will have brought some reassurance to the market after more-depressed April and May sales, providing stronger growth year-on-year, said vehicle lender Wesbank.
Export sales recorded an increase of 5,044 units, or 18.0%, to 33 054 units in June 2022 compared to the 28 010 vehicles exported in June 2021.
Overall, out of the total reported industry sales of 41,019 vehicles, an estimated 34,935 units, or 85.2%, represented dealer sales, an estimated 8.6% represented sales to the vehicle rental industry, 5.0% to industry corporate fleets, and 1.2% sales to the government.
The June 2022 new passenger car market at 29,545 units had registered an increase of 5,048 cars, or a gain of 20.6%, compared to the 24,497 new cars sold in June 2021. The car rental industry supported the new passenger car market during the month and accounted for 11.2% of sales in June 2022, Naamsa said.
Lebogang Gaoaketse, head of marketing and communications at WesBank, warned however that the new vehicle market remains volatile for many reasons, most of these beyond the control of manufacturers.
“There are well-known pandemic-related consequences that continue to impact market performance. Additionally, broader challenges facing the country over the past few months have compounded the recovery of new vehicle sales.”
This includes the recent natural disasters impacting production and logistics, particularly in KwaZulu-Natal; the ongoing global supply constraints, not only of new vehicle stock, but also parts; economic factors impacting affordability such as fuel prices and rising interest rates; as well as the impact the recent state of the energy grid will inevitably have on consumer and business confidence over the coming months.
“The market is unpredictable, suffice to say that it appears demand remains higher than the market is able to deliver,” said Gaoaketse.
Wesbank lending data showed that the average value of new cars financed in June was R352,208, down from R369,951 during June 2021.
“While we should celebrate this recovery of new vehicle sales, this performance must be considered within the context of more stringent Covid-19 regulations during the first half of last year,” said Gaoaketse. “Based on similar performance during the second half of the year, it is possible to see a South African new-vehicle market exceed 500,000 units this year.”
Naamsa also pointed to some caution ahead. As consumers start to feel the pinch of rising food and fuel prices along with higher interest rates on their cost of living, the spill-over effect of reduced disposable income will increasingly result in lower demand for non-essentials.
“In a further blow to the economy resulting in escalating business and consumer anxiety, stage 6 load shedding was implemented during the month, only the second time since 2019. Just emerging from Covid-19 and the impact of the devastating floods in KZN, stage 6 load shedding will cost the South African economy dearly at a time when it is already facing a myriad of headwinds battling to recover,” it said.
Read Also: New Driving Rules Proposed For South Africa
Article Credit To BusinessTech Motoring.
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