The Automotive Business Council (Naamsa) has expressed disappointment at the lack of government support for the struggling industry on the back of the energy crisis and the rising cost of living squeezing
Naamsa yesterday was reflecting on new vehicle sales performance for February, looking at how monetary policy amendment and the Budget Speech influenced the automotive industry.
Naamsa CEO Mikel Mabasa said the escalating cost of living in the country was slowly putting off buyers of new vehicles as consumers have to contend with other urgent household demands.
“The South African Reserve Bank's decision to increase interest rates for the eighth time in a row is a reminder that South Africa, like much of the world, is still in the midst of an increased cost-of-living predicament caused by global geo-political events such as the Russia/Ukraine conflict, lingering effects of the Covid-19 pandemic, and a global inflationary environment,” Mabasa said.
“In addition, consumer spending and household discretionary income continues to shrink with increases in fuel costs, electricity costs and many other basic costs that impact directly on vehicle sales decisions of our motorists.”
According to data from Naamsa, new vehicle sales had a firm and momentum-building second month to the year.
The total domestic new vehicle sales increased by 1 128 units, or 2.6%, to 45 352 units, compared to the same period last year.
However, year-on year vehicle exports fell by 3 943, or 11.5%, from 34 352 units in February 2022 to 30 409 units in February 2023.
Naamsa said while momentum for the new vehicle market had been slow, it was forecasting that both domestic sales would grow by 6.3% (at 563 000 units) for 2023 and export sales would grow by 8.3% (380 900 units).
As far as vehicle for the year go, it said this year was riddled with a combination of challenges from logistic infrastructure to power security and pressures on business and household spending, however, historic resilience by the industry was a safe compass driving industry aspiration.
Overall, of the 44 224 vehicles that were reported as having been sold across the industry, an estimated 37 091 units, or 83.6%, were dealer sales.
Another estimated 9%, 5.1%, and 2.3%, respectively, were sales to the vehicle rental industry, government, and corporate fleet.
When compared to the 29 657 new passenger vehicles sold in February 2022, the new passenger car market in February 2023 saw a gain of 319 vehicles, or 1.1%, totalling 29 976 units.
Mabasa also said they were disappointed by the government’s lack of support for new-energy vehicles (NEVs), which could catapult the country into the competitive world of electric cars.
“National Treasury's ‘disappointing posture’ not to announce any support programme for the manufacturing of NEVs and NEV components in the country had also dampened the spirits within the sector,” Mabasa said.
Last month, Mabasa said the automotive industry understood and appreciated that the introduction of NEVs was not just about replacing the traditional internal combustion engines with new technologies but also about the important role the auto industry plays in decarbonising road transport in achieving carbon neutrality by 2050.
He said South Africa had been painfully slow in finalising its governance and policy transformation priorities, and the country needed to urgently enhance existing auto policies to facilitate a high-yielding business environment.
BUSINESS REPORT