South African Car Sales Plummet by 14.2% in May

Car sales in South Africa experienced a notable decline last month, dropping by 14.2%, according to the National Association of Automobile Manufacturers of South Africa’s (Naamsa) retail sales statistics for May.

The data reveals that the number of vehicles sold locally in May 2024 was over 6,000 units fewer compared to May 2023. Vehicle exports also saw a year-on-year decline, with South Africa exporting 24,235 vehicles in May 2024, down from 29,947 in May 2023, marking a 19.2% decrease.

Brandon Cohen, chairperson of the National Automobile Dealers’ Association (NADA), attributed the sales decline to the uncertainty surrounding the general election.

“As expected, the general election and the accompanying uncertainty about South Africa’s future have severely impacted vehicle sales in May, with overall sales tumbling by 14.2% to a total of 37,105 units,” Cohen stated. He noted that buyers were particularly hesitant in the lead-up to the elections, although there was a noticeable increase in deliveries on May 30 and 31.

Retail motor dealers accounted for 89.4% of the sales in May, with the rental industry making up 4.5%, which is significantly below the norm. Corporate fleets contributed 3.1% of the sales, and government purchases accounted for 3% of the total.

Sales declined across all market segments, with passenger vehicle sales down by 11.7%, light commercial vehicle sales dropping by 19.5%, medium truck sales falling by 4.3%, and sales of large trucks and buses decreasing by 17.1% year-on-year.

Cohen pointed out that consumers are under significant financial pressure. Although repo rates have been stable, current interest rate levels remain prohibitively high for many potential vehicle buyers.

“We were pleased to see the country’s inflation rate drop from 5.3% to 5.2% last month, but it is still well above the South African Reserve Bank’s (SARB) target of 4.5% to justify a cut in interest rates,” Cohen said. He also mentioned that the outcome of coalition talks would impact South Africa’s currency and other inflationary factors.

On a positive note, Cohen highlighted that South Africans could expect some relief at the fuel pumps this month. The government announced a significant over-recovery in fuel pricing, leading to expected decreases in petrol prices by about R1 per litre and in diesel prices by R1 per litre for 500 ppm and 90c for 50 ppm, if initial numbers hold.

This decrease in fuel prices is expected to provide some relief to consumers, albeit amidst the broader economic challenges affecting vehicle sales in the country.

Picture Cred: Automotive Training Network