Pent up demand for new vehicles but “wait and see” approach from buyers

NADA Chairperson Brandon Cohen

SOUTH AFRICA, Johannesburg, 02 October 2023: Motor vehicle retailers in South Africa are witnessing strong evidence of pent-up demand for new vehicles, but many consumers are adopting a “wait-and-see” approach when making their purchasing decisions. This caution is driven by the rising cost of living, which is putting pressure on private buyers’ finances, and the economic slowdown, which is dissuading businesses from replacing their vehicle fleets at this time.

Year-to-date (YTD) total new vehicle sales have reached an impressive 401,912 units, maintaining a 2.5% lead over September 2022 when the total was 391,500 units. This positive trend reflects the resilience of the automotive sector in the face of challenging conditions.

This is the opinion of Brandon Cohen, the Chairperson of the National Automobile Dealers’ Association (NADA), after analysing the sales figures for September, released by naamsa | The Automotive Business Council on 2 October.

“Sales remain under pressure, and September was generally a challenging trading month, although there were some sparks of positivity,” said Cohen. “Applications to financial institutions for financing were slightly up, as were approvals, as consumers test the waters regarding their creditworthiness for a loan.”

In September 2023, sales reached 46,021 units, marking a 4.1% decrease compared to the same month last year. Similarly, built-up vehicle exports stood at 36,247 units, reflecting a 12.6% decline from the previous year. Motor retailers accounted for 80.7% of sales last month. The rental industry continued to play a significant role in the sector, accounting for 13.6% of total sales and 18.9% of the new car market.

Original Equipment Manufacturers (OEMs), distributors, and importers have begun offering a wide range of incentives and discounts on vehicles, from luxury to budget cars. Banks are also introducing innovative finance schemes to stimulate buying activity. The market currently offers favourable opportunities for buyers seeking a good deal.

“Chinese and Asian brands are gaining momentum in several market segments, as are ‘buy-down’ derivatives of popular models. The used vehicle market is gradually stabilising as inventory prices have adjusted appropriately,” concluded Cohen.

NADA is a constituent association of the Retail Motor Industry Organisation (RMI).

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