March sales shock for new vehicles

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New vehicle sales seemingly plummeted in March compared to the same month last year. But two major factors conspired against the numbers, according to WesBank.

Figures released by naamsa | the Automotive Business Council saw the March new vehicle market decline 11,7% to 44,273 sales, at first glance scaring the market. But whilst the number no doubt dealt the industry a bit of a blow – year-to-date sales are now 5,3% down compared to last year – not all was lost for March sales.

The particularly early calendar impact of the Easter public holidays meant March 2024 was a much shorter selling month than March last year (20 selling days versus 22 last year). “One can hope that April will bounce back and provide some level of correction against last year’s sales,” says Lebo Gaoaketse, Head of Marketing and Communication at WesBank. “But considering the rate of applications per day was up against March last year, the levels of demand remain high.”

The other significant impact is that March 2023 was last year’s best-selling month at 50,114 units, significantly out-performing the next-best sales month of 46,810 units in June. “Statistically, this provides a skew comparison in context, especially given that April sales – when the public holidays usually fall – was the worst-selling month for the past two years,” says Gaoaketse.

“So, while March sales appeared dreadful, down 5,841 units year-on-year, these were only 1,1% down on February’s performance,” says Gaoaketse.

Passenger car sales were down 15,9% to 26,577 units. Although 88% of the market volume was sold through dealers, retailers will be feeling some performance anxiety heading into the economic headwinds.

Light Commercial Vehicles (LCVs) continued to fare better, down 4,3% to 14,870 units. The resilient performance of the LCV market can best be seen in the segment’s year-to-date numbers, just 0,2% down for the first quarter.

“The broader economy remains a challenge for South African motorists,” says Gaoaketse. “With interest rates unchanged once again, they remain high amidst generally high inflation. Fuel prices will increase again this week, continuing to place pressure on household budgets and their ability to service debt.”

WesBank says the market will inevitably also be cautious with pending elections in May, dampening first half performance.

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