Car dealerships in South Africa managed to muster some growth in vehicle sales in 2023 despite consumers battling higher borrowing costs in the face of dwindling incomes.
According to numbers released by the National Automobile Dealers’ Association (Nada) this week, 532 098 vehicles were sold in 2023, representing a slight increase on the 529 556 reported sold in the previous year.
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The association noted that last year’s sales pleasingly kept up with 2022 records despite the industry recording a slowdown in sales volumes in the second half of the year.
It said December sales – at 40 329 units – marked the industry’s fifth consecutive month of year-on-year declines.
“The overall South African vehicle market managed to show some growth in 2023, which had seemed out of reach as the market declined in the second half of the year, and this is a good psychological boost for the industry as we enter 2024,” Nada chair Brandon Cohen said in a statement.
Even with the muted performance, local manufacturers still have a glimmer of hope as exports reached record highs of 396 290 units, growing 12.7% from the 2022 period.
Outlook
Nada admits the industry is not out of the woods yet, and will need to be resilient in the face of high interest rates and inflationary pressures, which may continue to restrain performance.
“Overall, last year, dealers had to cope with tough market conditions that were, arguably, the toughest since 2007 or even 1998 in terms of economic pressure on consumers,” said Cohen.
“This led to some overstocking, placing importers, distributors, and manufacturers under significant pressure to facilitate stock movement. Consequently, efforts were made to enhance market activity through year-end incentives, ensuring sustained sales momentum,” he added.
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The industry is now betting on easing interest rates and inflation to usher in some relief in the second half of the year, where gains could be likely.
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“The outlook for 2024 is cautiously optimistic, especially going into the second half of the year with expectations that interest rates should come down in the next few months on the back of lower fuel prices and hopefully a gradual decline in inflation,” said Cohen.
“We will be closely monitoring currency exchange rates as these are very fluid due to the global factors affecting them, such as wars, natural disasters and the many general elections pending worldwide in 2024, including right here in South Africa.
“This year will certainly not be a leisurely ride and will again require resilience and commitment from the dealer network,” he added.
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