Elections hurts new car sales in South Africa

Car sales in South Africa took a significant hit last month, with overall sales tumbling by 14.2%.

This is according to the National Association of Automobile Manufacturers of South Africa’s (Naamsa) retail sales statistics for May.

The figures show that the number of vehicles sold locally in May 2024 is over 6,000 less than in May 2023.

South Africa’s vehicle exports for May also declined year-on-year. In May 2023, the country exported 29,947 vehicles, compared to 24,235 in May 2024 — a decline of 19.2%.

According to a statement from Brandon Cohen, chairperson of the National Automobile Dealers’ Association (NADA), the sales decline was expected.

“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,” said Cohen.

“Buyers were very jittery in the run-up to the elections, leading to subdued activity, although there was a noticeable uptick in deliveries on May 30 and 31.”

According to NADA’s data, retail motor dealers contributed 89.4% of sales in May, with the rental industry’s offtake being 4.5% of sales. It noted that this was far below the norm.

Corporate fleets contributed 3.1% of sales, while the government took 3% of the total.

In May, sales declined in all market segments. Passenger vehicle sales declined by 11.7%, light commercial vehicle sales by 19.5%, medium truck sales by 4.3%, and large trucks and bus sales by 17.1% year-on-year.

“Consumers remain under significant financial strain, and although repo rates have been held steady for some time, current interest rate levels remain too high for many potential vehicle buyers,” said Cohen.

“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.”

However, he noted that the outcome of coalition talks will impact South Africa’s currency and other inflationary drivers.

Cohen also said South Africans can expect some relief at the pumps this month, with fuel prices dropping on Wednesday.

“The government announced a significant over-recovery in fuel pricing, so we can expect petrol prices to decrease this month by about R1 per litre and diesel to drop by R1 per litre for 500 ppm and 90c for 50 ppm if initial numbers hold,” he said.

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Elections hurts new car sales in South Africa