August 2024 Vehicle Sales See Decline Despite Strong July Performance

New vehicle sales in South Africa took a dip in August 2024, following a robust performance in July, according to naamsa | The Automotive Business Council. Despite the positive momentum in July, the market couldn't maintain its upward trajectory into August.

The total domestic new vehicle sales for August 2024 stood at 43,588 units, marking a decrease of 2,266 units or 4.9% compared to the 45,854 vehicles sold in August 2023. The export market saw an even sharper decline, with sales dropping by 14,658 units or 34.3%, resulting in 28,073 vehicles exported in August 2024 compared to 42,731 units in the same month last year.

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Within the total industry sales, 35,503 vehicles, or 81.5%, were sold through dealerships. The vehicle rental industry accounted for 12.4% of sales, government purchases made up 3.3%, and corporate fleets accounted for 2.8%.

On a positive note, the new passenger car market saw growth, with 30,022 units sold in August 2024, an increase of 891 cars or 3.1% from the 29,131 sold in August 2023. Car rental sales were particularly strong, contributing 16.7% of all new passenger vehicle sales for the month.

However, the market for new light commercial vehicles, including bakkies and minibuses, experienced a significant decline, with sales falling by 2,941 units or 21.5% to 10,709 vehicles, compared to 13,650 in August 2023. The medium and heavy truck segments showed mixed results. Medium commercial vehicle sales rose by 8.1% to 748 units, while heavy trucks and buses saw a decrease of 11.4%, with only 2,109 units sold compared to 2,381 in August 2023.

The overall decline in vehicle exports continued, influenced by weak economic activity in Europe. Despite this, vehicle exports to the US saw a significant increase of 132% for the year to date compared to the same period in 2023.

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The naamsa SA Auto Week, scheduled for October 15-18, 2024, at the Cape Town International Convention Centre, will provide a crucial platform for networking and discussions within the South African automotive sector. The event will showcase 100 years of the industry’s history and include the naamsa Accelerator Awards and the Captains of Industry Gala, among other highlights.

Despite the challenges, there are signs of optimism. The stronger rand, lower consumer inflation, decreasing fuel prices, and potential interest rate cuts before the end of the year are expected to boost consumer sentiment and economic activity. While immediate improvements in vehicle affordability may be limited, these factors are anticipated to contribute to a more positive outlook for the remainder of the year.

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Shifting trends in the South African car market

The preferences for motor vehicle segments and body shapes in South Africa are undergoing significant changes, potentially marking a permanent shift. As the market grapples with new realities, even long-standing favourite brands are facing challenges.

Over the past 15 years, South Africa’s motor retail industry has been shaped by slow economic growth, inadequate infrastructure, political instability, and a series of global shocks.

"These include the 2008 financial crisis and the Covid-19 pandemic in 2020, both of which had severe economic and social impacts. More recently, Russia’s invasion of Ukraine and conflicts in the Middle East have heightened global political tensions and hindered economic activity," says Paul Marshall, managing director of Lightstone Auto which analysed the data and produced the graphs.

Globally, car sales rose to approximately 75,3 million in 2023, up from around 67,3 million in 2022. This growth reversed the declining trend seen during the economic slowdown of 2020 and 2021. Supply chain disruptions caused by Covid-19 and geopolitical conflicts led to shortages in the automotive semiconductor industry. Despite these challenges, 2023 sales exceeded pre-pandemic levels and are expected to continue rising through 2024, according to Statista.

"Both global and local factors influence consumer behaviour in South Africa, and the outlook for sales is less optimistic compared to other international markets," adds Marshall.

In 2009, South Africa recorded 393 405 new vehicle sales, the second-lowest in the past 15 years, just above the 389 205 sales in 2020 when Covid-19 struck.

Although the market recovered post-2009, reaching more than 600 000 annual sales between 2012 and 2015, consumer demand weakened before the pandemic, dropping to 536 604 in 2019. Currently, sales have rebounded to similar levels (531 787 in 2023), with further growth dependent on an improving domestic economy.

There are indications of potential interest rate relief from the South African Reserve Bank this year, although government policies may shift following the 2024 election results. Until then, consumers are likely to remain under financial pressure and continue to opt for more affordable vehicles.

Market Dynamics: Brands, Body Shapes, and Segments

Economic challenges may dampen consumer spending, but lifestyle changes and resilience are driving new purchasing trends in South Africa’s car market.

Toyota and Volkswagen remain the top brands, but the competition is heating up. Suzuki surged to third place in 2022, overtaking Hyundai, which had moved to third just a year earlier. Renault and Kia have also entered the top 10, with Renault in seventh place since 2014 and Kia in eighth since 2016. New entrants like Chery and Haval, offering more affordable options from China and South Korea, are also making their mark.

"Interestingly, BMW and Mercedes-Benz have fallen out of the top 10, and as the quality of more affordable vehicles continues to improve, these shifts could become permanent," he says.

Preferences for body shapes are also evolving. The Crossover/SUV segment, which accounted for about 13% of the market in 2009, has steadily grown to become the top choice by 2020, reaching 35% of the market in 2023.

This trend reflects consumers’ concerns about road safety and a preference for more robust vehicles that offer better protection and navigation on pothole-ridden roads. The Double Cab One-ton Pick-up has also seen consistent growth over the past 15 years, becoming the third top seller in 2023, further supporting this observation.

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 New vehicle sales improve

New vehicle sales last month climbed by 24,6% compared to the preceding year and naamsa | The Automotive Business Council says the new vehicle market recovered from the economic disruptions caused by the unrest in July 2021 but, the knock-on effects of the disruptions as well as the cyberattack on Transnet operations were still visible on vehicle exports during August. 

August new vehicle sales were 41 425 units, reflecting an increase of 8 166 units, or 24,6%, from the 33 259 vehicles sold during the corresponding month last year. Export sales recorded a decline of 3 583 units, or 15,6%, to 19 446 units this year compared to the 23 029 vehicles exported at the same time last year.  

Overall, out of the total reported industry sales of 41 425 vehicles, an estimated 34 620 units, or 83,6%, represented dealer sales, an estimated 12,0% represented sales to the vehicle rental industry, 2,5% to industry corporate fleets, and 1,9% sales to government.

 

The August 2021 new passenger car market at 27,157 units registered an increase of 7 822 cars, or a gain of 40 5%, compared to the 19 335 new cars sold last year. The car rental industry supported the new passenger car market during the month and accounted for a sound 14 2% of car sales in August 2021. 

Toyota South Africa Motors (TSAM) led the field in August new-vehicle sales with Hilux in the top spot. Notching up 3 335 sales, Hilux sales were made up of 1 732 double cabs, 1 058 single cabs and 545 extra cabs.

 

This, together with performances from Hiace (1 298), Starlet (1 203), Urban Cruiser (876), Fortuner (856) and Corolla Quest (806) saw Toyota recording a total of 10 543 (market share: 25,4%) sales across the Toyota, Lexus and Hino brands. 

Leon Theron, Senior Vice President of Sales and Marketing for TSAM, says: “Ongoing challenges in the domestic new vehicle segment are worrying.” 

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 11 749 units during August 2021 recorded an increase of 407 units, or a gain of 3,6%, from the 11 342 light commercial vehicles sold during August 2020. Sales for medium and heavy truck segments of the industry reflected a weak performance and at 719 units and 1 800 units, respectively, showed a decline of 56 units, or 7,2% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses a decline of 7 vehicles, or a fall of 0,4%, compared to the corresponding month last year. 

“South Africa’s network of retail motor vehicle dealers once again showed tremendous resilience in tough trading conditions in August, with numbers pointing to a much more resilient market, which is encouraging,” says Mark Dommisse, Chairperson of the National Automobile Dealers’ Association (NADA).

 

“The global shortage of semiconductors continues to play havoc with production and is causing many factories to be idled. This shortage is likened to the COVID-19 pandemic, in that it will not go away. In fact, the problem seems to be getting more serious as time goes by with manufacturers either pausing production or deleting chip-specific functionality from certain model lines. 

“Then, here in South Africa, we are still encountering delays caused by the unrest and the port disruptions which is keeping customers waiting for their new vehicles. In some cases, they are tired of waiting and are changing brands by shopping elsewhere. Unfortunately, we will be forced to face this uncertainly for a while still and I don’t think supply will stabilise for some time to come. 

“We also have to deal with a fluctuating Rand – down one day and up the next. This is a volatile situation, and we believe this rollercoaster ride will continue in the coming months, with political uncertainty also playing a role.” 

“Taking into account that July sales were significantly disrupted, the fact sales were up 8,9% over June indicates some reparations from impacted July sales,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank.

 

“We have consistently held the optimistic view of recovery for the industry during 2021, with various signs showing growing confidence from both consumers and business.” 

In terms of demand, WesBank believes the market is out-running the industry’s ability to supply.

“Between the challenges of the pandemic, micro-chip shortages affecting international production – and therefore import supply to South Africa – and the prevailing market conditions that have simply hampered the free supply of certain models, the new vehicle market is poised to capture growth opportunities while trying to keep up.” 

The bank’s demand is measured by applications for finance that continue to sit at levels equivalent to or above those experienced prior to the pandemic. 

“This is reassuring in two senses,” explains Gaoaketse. “On one hand, consumers have been keeping their vehicles for longer, especially delaying purchases through the pandemic. This will create natural demand on the replacement cycle as consumers need to renew their ageing vehicles, probably with lower mileage. 

“The market showed good recovery during August from the loss of momentum experienced in July. The outlook for the remainder of the year looks positive and will hopefully not be impacted by further lockdown restrictions or other unforeseen factors.”

 EV sales picking up in Euro markets

Electric vehicle sales are picking across Europe despite a general slowdown in sales and, while on a numbers basis South Africa remains a small player in the global contest, the trends in sales from source suppliers to our market is important. 

According to data from 26 European markets, new car registrations slowed in July, recording a year-on-year decline of 24% as total volume decreased from 1,27 million units to 967 830. Similar results were recorded in July 2012, when the market registered 966 090 units. 

The year-to-date results remain positive, up by 17% compared to 2020 with 7 381 735 units registered, but down by 24% when compared with January to July 2019.

 

Felipe Munoz, Global Analyst at JATO Dynamics, commented: “Despite the efforts of national governments to boost consumer confidence, the impact of the pandemic is still being felt by the industry.” 

While volume increased in Norway, Croatia, Greece, Latvia, Romania, Estonia, Ireland and Lithuania, this combined accounted for only 8% of total registrations during the month. 

In contrast to the overall trend, consumers in Europe continued to buy more low emissions vehicles. In July, a total of 160 646 BEV and PHEV vehicles were registered, accounting for almost 17% of total registrations. This is the second highest monthly market share after June 2021 and the third highest ever in Europe – BEVs accounted for 47% of that total. 

Munoz added: “Consumers continue to respond positively to the deals and incentives attached to EVs which have made these vehicles far more competitive in terms of their pricing. But despite becoming increasingly popular, consumer uptake has not been enough to offset the big drops posted by diesel cars.” 

JATO data indicates between July 2019 and July 2020, the market share for diesel vehicles dropped by just over 2 points, while their market share dropped by almost 8 points between July 2020 and July 2021. During the same period, the market share for EVs grew by the same amount lost for diesel vehicles. 

The market share for gasoline cars has steadily declined from 63,4% in July 2019 to 59,8% in July 2020, and to 59,0% last month.

 

Munoz continued: “We are beginning to see the impact of campaigns that favour EVs over ICE vehicles playout in the market, however the industry is not yet doing enough to enable EVs to absorb the losses sustained by traditional powertrains.” 

While diesel registrations decreased by 166 000 new units between July 2020 and July 2021, and almost 207 000 between July 2019 and July 2021, EVs gained only 49 000 units between July 2020 and July 2021, and 125 000 units between July 2019 and July 2021. 

In July’s model rankings, the Dacia Sandero (Renault Sandero in South Africa) secured the top spot for the first time since its launch back in 2008. 

Thanks to the new generation, the subcompact posted significant gains in Germany (+15%), Romania (+24%), and topped the rankings in France and Spain – alongside being the 8th best-selling car in the year-to-date rankings. 

The Sandero’s volume fell by only 2% compared to July 2019, while other leaders such as the Volkswagen Golf, Volkswagen Polo, Dacia Duster, Toyota Corolla, Volkswagen Tiguan, Opel/Vauxhall Corsa, Skoda Octavia, Peugeot 208, Mercedes A-Class and Renault Clio, posted drops between 17% and 52%. 

Last month, there were also strong performances in the SUV segment as both the Hyundai Tucson and Ford Puma entered the top 10. JATO data shows that SUVs recorded the highest ever monthly market share in Europe during July at 46.1%. Although the registrations volume fell by 15%, these vehcicles gained market share at the expense of larger declines posted by the traditional cars (-28%), MPVs (-48%) and sport cars (-37%).

 Some recovery in vehicle market

Cautious optimism seems the most apt description of the South African vehicle market that made gains during June only to have lockdown restrictions raised up a level – seriously impacting a wide range of business buyers. 

Reflecting on the new vehicle sales statistics for the month of June 2021, The Automotive Business Council ( naamsa) said the recovery in the new vehicle market is gaining momentum and in line with industry expectations, notwithstanding the country moving from level 2 to level 3 in mid-June and subsequently to adjusted alert level 4 lockdown restrictions at the end of June 2021. 

Aggregate domestic sales in June 2021, at 38 030 units, reflected an increase of 6 387 units, or 20,2%, from the 31 643 vehicles sold in June 2020. Export sales also recorded a gain of 9 567 units, or 50,9%, to 28 384 units in June 2021 compared to the 18 808 vehicles exported in June 2020. 

Overall, out of the total reported industry sales of 38 030 vehicles, an estimated 32 847 units, or 86,3%, represented dealer sales, an estimated 7,6% represented sales to the vehicle rental industry, 3,9% to industry corporate fleets, and 2,2% sales to government. 

“The fact 86,3% of the 38 030 new vehicles sold in South Africa in June went through the retail dealer channels is a strong indicator of growing confidence in buying capital assets by both the business and consumer sectors of the market,” says Mark Dommisse, Chairperson of the National Automobil Dealers’ Association (NADA). 

Toyota South Africa Motors (TSAM) marked the end of the second quarter with a total of 56 460 vehicles sold in South Africa since January. Spearheading the company’s retail roll of honour is the Hilux with 19 818 units sold, year to date. For the month of June, Hilux amassed a total of 3 320 sales. The Hilux made a remarkable contribution to TSAM’s total sales of 9 630, with an overall market share of 25% for the month of June. 

Overall, the June 2021 new passenger car market at 24 482 units registered an increase of 5 348 cars, or a gain of 28,0%, compared to the 19,134 new cars sold in June 2020. The car rental industry accounted for 10,5% of car sales in June 2021. 

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 11 208 units recorded an increase of 986 units, or a gain of 9,6%, from the 10 222 light commercial vehicles sold during June 2020. 

Sales for medium and heavy truck segments of the industry reflected a mixed performance and, at 687 units and 1 653 units, respectively, showed an increase of 110 units, or 19,1% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses a decline of 57 vehicles, or a fall of 3,3%, compared to the corresponding month last year. 

“Ongoing stronger sales through the dealer channel signals improved consumer and business sentiment, rental companies are re-fleeting again while the delayed replacement cycle, due to lockdown restrictions in 2020, are catching up in contributing to improved new vehicle sales,” says naamsa. 

“However, of concern is the persistent electricity supply disruptions, port delays, and the third Covid-19 wave of infections being experienced. The vaccine rollout is slow and a third wave of the pandemic threatens to dent the momentum in consumption in the country, especially if the adjusted alert level 4 lockdown restrictions are extended for longer than the initial two-week period.” 

Compared to the first six months of 2020, the new vehicle market was now 40,1% above the corresponding period last year, but compared to the pre-Covid-19 first six months 2019, the new vehicle market was still 11,7% below the corresponding period 2019, highlighting that a full recovery would be protracted until around 2023. 

Vehicle exports continued their upward momentum during the month and according to the ABSA Purchasing Managers’ Index (PMI), the outlook for manufacturers targeting the European and US export markets remains very bright, with recent international PMI readings remaining at or near record-high levels. In terms of a timeframe for a full recovery to pre-COVID-19 vehicle record export levels, much will depend on the ongoing path and management of the global pandemic. 

“What we really need as a stimulus is a rapid increase in the rate of vaccinations. The injection of R10-billion into Aspen to facilitate vaccine production is good news in the fight against the Coronavirus,” says Domisse. 

“While the majority of sales during June were not severely impacted by COVID-19 restrictions, we should expect a returned level of hesitancy during July,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Both business and consumer confidence are certainly building their own momentum despite the current environment, which is providing continued energy into the slow recovery of the market.”

 

Vehicle prices skyrocket

Year-on-year comparisons of new vehicles sales are still hopelessly out of kilter with 2020 having been the hard lockdown – but, what is concerning is the fact vehicle prices have skyrocketed by nearly three times the general inflation rate during the first quarter of this year according to the latest Vehicle Pricing Index (VPI) released by TransUnion. 

“When measured against WesBank’s average deal size, we can see a similar trend in the amount of finance to access these vehicle purchases,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank.. “Compared to a year ago, new vehicle finance agreements through our book are averaging a deal size of R356 313, up 11,2%, while pre-owned deals average R253 537, an increase of 10,6%.” 

Aggregate domestic sales in May 2021, at 38, 37 units, reflected an increase of 25 463 units, or 197,8%, from the 12 874 vehicles sold in May 2020. Export sales also recorded a gain of 23 425 units, or 196,8%, to 35 326 units in May 2021 compared to the 11 901 vehicles exported in May 2020. 

Overall, out of the total reported industry sales of 38 337 vehicles, an estimated 33 642 units, or 87,8%, represented dealer sales, an estimated 8,2% represented sales to the vehicle rental industry, 2,0% to industry corporate fleets 2,0%, and sales to Government. 

The May 2021 new passenger car market at 24,122 units registered an increase of 15 156 cars, or a gain of 169 0%, compared to the 8 966 new cars sold in May 2020. The car rental industry accounted for 11,4% of car sales in May 2021.

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 11 930 units during May 2021 had recorded an increase of 8 859 units, or a gain of 288,5%, from the 3 071 light commercial vehicles sold during May 2020. 

Sales for medium and heavy truck segments of the industry also reflected a positive performance and at 559 units and 1 726 units, respectively, showed an increase of 256 units, or 84 5% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses an increase of 1 192 vehicles, or a gain of 223 2%, compared to the corresponding month last year.

The Naamsa CEOs Confidence Index, an in-house leading business confidence indicator of current and future developments in the domestic automotive industry, reflects the general agreement by the Naamsa CEOs business conditions for the automotive industry over the next six months will continue to improve.

They are mainly positive of a robust recovery in the domestic as well as the global new vehicle markets over the next six months, as the domestic and international markets rebound from the low base of 2020. However, structural constraints in the economy, coupled to the growing debt of the country and the ongoing electricity capacity limitations would continue to curb a potential quick recovery to pre-COVID-19 levels. 

“This is very heartening, particularly the fact that dealer sales represented 87,8% of the total reported new vehicles sales of 38 337 units in May,” says Mark Dommisse, the Chairperson of the National Automobile Dealers’ Association (NADA). 

“Strong sales through the retail dealer channel means there is an improvement in consumer confidence, which is good news for the remainder of the year. Admittedly, the figures in April and May last year were very skewed, as our members operated under stringent lockdown regulations. However, the ongoing upturn in 2021 is an encouraging positive with naamsa now forecasting year-on-year growth for 2021. 

“A year ago, dealers were resuming limited retail sales in May under lockdown Level 4, but now the market is improving significantly while we await the possible negative effects that could flow from a third wave of COVID-19 infections. 

“The lockdown had a devastating effect on the rental industry which has resulted in a lack of year-old cars coming onto the used vehicle stands at dealerships. That is putting upward pressure on used car pricing. This, in turn, is impacting on sales volumes of preowned models. However, it is encouraging to see that rental companies are re-fleeting again and in May these companies bought 8,2% of total vehicles and 11,4% of the passenger car volume. 

“We are seeing limited new vehicle availability in certain segments due, in main, to the global microchip shortage which is taking longer to overcome than was originally presumed,” added Dommisse. 

“It is also invigorating to see the introduction of and the appetite South African car buyers have for new model ranges, specifically in the Compact SUV segment, such as the Toyota Urban Cruiser, Toyota Starlet, Suzuki Vitara Brezza, and the ongoing stream of new models from Hyundai and Kia. Notable as well is, the Peugeot 2008 and the Haval Jolion, with Nissan set to join the fray with its Magnite crossover.”