New vehicle sales have shown positive growth for the second month this year, according to data from the National Association of Automobile Manufacturers of South Africa (Naamsa). Total industry sales amounted to 59 384 new vehicles. Passenger car sales grew 1.6%, year-on-year, to 40 666, and Light Commercial Vehicle (LCV) sales grew substantially compared to November last year, totalling 15 827 units – growth of 14%.
But while market performance looks strong, the indication shouldn’t be confused with consumers having the means to address the affordability barrier. “Passenger vehicle sales through dealer channel are down 2.8%, indicating that consumers are still struggling. WesBank data shows that these consumers are moving to the used market,” said Rudolf Mahoney, head of research at WesBank. “However, sales to government and rental fleets have helped with the passenger vehicle segment’s overall growth.”
Commercial vehicle sales, including LCVs and heavier vehicles, are being driven by strong demand in the business sector.
There is certainly latent demand and consumer confidence to consider a vehicle purchase. WesBank book data for October saw a new all-time record for vehicle finance applications – the fourth time this year. Applications for new vehicle finance grew 4.85%, year-on-year, while demand for used vehicle finance continues to surge ahead, growing 17.04%, year-on-year. This falls in line with data that shows the current used-to-new sales ratio increasing to 1.43:1, representing a year-on-year increase of 8%.
Buyers of both new and used vehicles are also structuring their contracts to make use of extended finance periods as well as balloon payments, to make monthly repayments more affordable. Average values for new car deals flattened in October, while the average contract value for used vehicles has grown as a result of inflation and increased demand.
“The second half of this year is performing far better than the first six fared. If this firming of new vehicle sales continues, the year will close out far better than initially expected,” said Mahoney.
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