‘Frail economy’ puts South Africa’s car sales on the skids

For used and new car sales, it seems winter has come. Reports from Autotrader and the automotive business council Naamsa show that sales stalled in June as weak demand continued to stifle the industry. 

Autotrader, the online marketplace for new and used vehicles, reported that year-on-year sales of used and new cars were down by 6.4% in June.

Autotrader CEO George Mienie blamed the constrained economy for stifling demand. “The 27,750 used cars sold in June realised a value of R11.3-billion. Though sales improved by the smallest of margins in comparison to May, the additional 21 units failed to move the monthly growth percentage needle,” he noted.

Toyota was the top seller in the used car segment, followed by Volkswagen and Ford, and locally produced vehicles remained dominant. Ford Ranger was the biggest seller, closely followed by Toyota’s Hilux and Volkswagen’s Polo. For the first time, Kia Picanto was in Autotrader’s top 10.

In June, the average price of a five-year-old used car was R407,655. 

Suzuki’s Swift had the highest year-on-year sales growth, followed closely by the Volkswagen Polo Vivo and Nissan NP200. The Polo Vivo — known for its fuel efficiency and reliability — was not only the top seller, but also saw the strongest monthly sales increase.

Naamsa also reported a continued decline in new vehicle sales in June, saying the trend — observed since August 2023  — was evidenced by weak consumer and business spending over the past nine months.

Domestic new vehicle sales in June plummeted by 14% compared with the previous year, reaching 40,072 units. This represented a significant drop of 6,531 vehicles from the 46,603 sold in June 2023.

On a positive note, vehicle exports saw a 3.6% increase, climbing from 27,329 units in June 2023 to 28,306 units in June 2024.

Naamsa reported that new vehicle sales in June were down by 14.2% (at 37,105 units) from May. Export sales were also substantially down, with a 19.1% year-on-year drop-off. Only 24,235 units were exported in May, which is 5,712 fewer units than a year ago.

Domestic sales of new light commercial vehicles, bakkies and minibuses were down by 2,498 units (to 10,334) for the month, a 19.5% loss.

The medium and heavy truck segments were also weak on sales, dropping by 7.3%.

A bright spot

New energy vehicle (NEV) sales were a bright spot for the industry, surging by 82.7% in South Africa during the first quarter of 2024. At the end of May, Naamsa reported that 3,042 NEVs were sold between January and March, compared with 1,665 in the same period last year.

NEVs encompass electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs). Unlike EVs, which rely on battery power, PHEVs combine a rechargeable battery and electric motor with a traditional petrol engine.

However, consumers are under pressure. TransUnion’s Vehicle Pricing Index for Q1 shows that soaring inflation, elevated fuel prices and currency volatility put significant pressure on consumer finances, leading to a downturn in vehicle sales. 

The credit bureau said new passenger car sales fell by 8.4%, while total vehicle financing contracted by 10.6% as buyers opted for more affordable, pre-owned vehicles and alternative financing methods. Average loan amounts were R391,000.

For less than that amount, the only battery-electric vehicle in the SA market is the utilitarian EVA City Blitz.

Launched in June 2023, the compact EV sells for around R239,000, largely aimed at small businesses, mining operations and urban delivery services. Its standout feature is its economical operation, boasting costs as low as 20c/km.

Equipped with a 10kWh lithium battery, the City Blitz has a claimed range of up to 160km on a single charge.

South Africa’s NEV sales remain minuscule compared with international sales. 

(Source: International Energy Agency)