New vehicle sales crashed by 14% in June as tough economic conditions continued to restrict the market along with the 4,7% increase in vehicle prices in the first quarter of this year.
WesBank noted affordability is the biggest factor limiting growth and its data showed an increase in average loan amounts and longer loan durations, indicating consumers are holding onto their vehicles longer or extending loan periods to reduce instalments. High-interest rates remain a significant burden, with relief expected in the second half of the year.
In June, the average loan value at WesBank was R410 000. With a prime lending rate of 11,75%, the monthly instalment is estimated at R8 054,83, which is R1 015,.81 more a month compared to financing the same vehicle in 2020 at a 7% prime rate. This adds up to about R75 730,32 more over the contract period due to current interest rates.
In June 2024, domestic new vehicle sales were at 40 072 units, down by 6 531 units (14%) from June 2023. On the bright side, export sales saw a small increase of 977 units (3,6%) to 28 306 units compared to 27 329 in June 2023.
Out of the total industry sales of 40 072 vehicles, 82 5% were dealer sales, 11% went to the vehicle rental industry, 3,6% to the government, and 2,9% to corporate fleets.
Now is the time to take a serious look at pristine pre-owned vehicle choices - click here
Take a look at our affordability calculator right here
The new passenger car market saw a 9% drop, with car rentals accounting for 14.2% of these sales. Sales of new light commercial vehicles, bakkies, and mini-buses also fell by a hefty 24,3% compared to June 2023.
Medium and heavy truck sales were also down, with medium trucks dropping 27,7% to 531 units and heavy trucks and buses down 11,7% to 2 061 units.
Get a pre-owned Volkswagen Polo by clicking here
Naamsa Tha Automotive Business Council, expressed its approval of Parks Tau as the new Minister of Trade, Industry, and Competition.
"The DTIC oversees the automotive industry, and we're glad to have Minister Tau in this crucial role," says Mikel Mabasa, naamsa CEO. "Minister Tau knows the auto industry well and has contributed significantly to our sector. We look forward to working with him as we reimagine the future of the automotive industry together."
Despite the decline in new vehicle sales, some positive signs emerged as the markets responded well to the new Cabinet announcement, three months without load-shedding, lower fuel prices in July 2024 and the possibility of lower interest rates before the end of the year, offering a brighter outlook for the second half of the year.
Many consumers are delaying purchases or opting for alternatives like e-hailing, sharing, or pre-owned vehicles, keeping new vehicle sales under pressure until interest rates drop or better incentives from manufacturers emerge.
Your pre-owned Suzuki is just a click away
Brandon Cohen, chairperson of the National Automobile Dealers’ Association (NADA) said dealers are closely aware of the financial pressures on consumers, and despite challenges like crime, corruption, and utility supply issues, there are signs of a brighter second half of the year for both consumers and dealers.
Colin Windell
Proudly CHANGECARS
