The South African new vehicle market has yet to recover to pre-pandemic levels, with 2024 having seen a 3.0% year-on-year decline.
According to figures released by Naamsa - The Automotive Business Council, new vehicle sales totalled 515,712 units in 2024, down from 531,775 in 2023.
It was widely expected that weak demand would characterise the first half of the year amid election uncertainty, followed by an upswing in the second half of 2024. However the market was slow to gain momentum amid a tough economic climate for consumers, and the true recovery only started in the final quarter of the year, rounded off by 2.5% year-on-year growth in December.
Passenger vehicle sales totalled 351,302 units in 2024, an increase of 1.1% versus 2023, with strong support from the rental car industry having provided a boost in the latter part of the year.
Bakkies and other light commercial vehicles, however, saw a year-on-year decline of 12% last year, with 133,254 sales recorded, down from 151,490 in 2023. The medium and heavy commercial vehicle and bus sectors saw respective declines of 6.5% and 4.9%.
Better times ahead?
Naamsa expects the South African new vehicle market to return to pre-pandemic levels in 2025, buoyed by a confluence of economic indicators.
“The South African Reserve Bank’s two interest rate cuts towards year-end, the first in four years, coupled with easing inflation, has created a more favourable economic environment,” the industry body said.
“Additionally, lower fuel prices have bolstered consumer confidence and disposable income as petrol prices were at the lowest point they have been in nearly three years in 2024.”
Naamsa said further interest rate cuts this year would support vehicle affordability across all segments.
“The domestic outlook for 2025 is expected to improve, driven by a revival in business and consumer sentiment stemming from improvements in the country’s key economic indicators,” Naamsa added.
“With an improved GDP growth rate of around 1,5% projected for 2025, the new vehicle market would likely improve by single digits compared to the level of 2024.”
Brandon Cohen, Chairperson of the National Automobile Dealers’ Association (NADA), believes that stabilising inflation, easing energy constraints and further reductions in interest rates could offer some relief for consumers and businesses in 2025, but there are various risk factors to the economic outlook for the industry.
“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,” Cohen said.
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