Cautious optimism ahead despite 2024 vehicle sales decline

In December, new vehicle sales in South Africa rose for the third consecutive month, increasing by 2.5% compared with December 2023.

Passenger car sales led this recovery, rising by 8.2%, while the rental industry accounted for 10.9% of the total.

However, light commercial vehicle (LCV) sales declined by 10.3%, and medium and heavy trucks by 7.6% and 11.8% respectively.

Despite these decreases, the positive momentum in the final quarter of 2024 provided some relief.

Reasons for decline

Chairperson of the National Automobile Dealers’ Association (NADA) Brandon Cohen highlighted a key contributor to the decline in LCV sales.

“One of the primary factors was the pullback of SA Taxi Finance, which prompted other financial institutions to follow suit. This led to a sharp decline in taxi sales, which fell from well over 1 000 units per month to just a few hundred since March. Despite this, other LCV segments showed growth, partially offsetting the impact.”

For the full year, total vehicle sales declined by 3% to 515 712 units – the lowest annual figure since the Covid-19 pandemic.

“The ongoing sluggish economy in South Africa continued to weigh on the new vehicle market in 2024, despite some upticks in the passenger car segment during the fourth quarter. Annual vehicle sales in South Africa typically align with the country’s GDP, and this was again the case in 2024. Meaningful growth is unlikely until the overall economy is revived and we transition into a growth phase for our GDP,” said Cohen.

Reflecting on the year’s performance, Cohen described it as a ‘disappointing conclusion to a year in which we had hoped for growth. However, the last three months showed positive momentum’.

“Unfortunately, an evident lack of confidence in the business sector has weighed heavily on commercial vehicle sales.”

Looking ahead

Cohen expressed cautious optimism for 2025.

“The coming year will be intriguing, with local industry wage negotiations and changes in the US administration adding to the complexities. Managing consumer demand amid rising cost pressures remains challenging for our retail dealers. Consumers are increasingly opting for smaller, more affordable vehicles, or high-quality pre-owned models to navigate economic constraints, which, in turn, places pressure on retailers’ bottom lines.”

He added that stabilising inflation, potential further reductions in interest rates, and easing energy constraints could offer some relief for consumers and businesses. However, global factors such as volatile oil prices, geopolitical tensions and ongoing conflicts remain potential disruptors to the sector in the months ahead.

Hybrid vehicles are also gaining traction, driven by fluctuating petrol prices and growing interest in sustainable solutions. Cohen remarked that dealerships offering flexible financing options and aligning inventory with affordability trends will maintain a competitive edge.

“We are also seeing some OEMs adjusting pricing to counter more affordable Chinese alternatives, and I expect this trend to continue into 2025,” concluded Cohen.

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