Uptick in October passenger vehicle sales indicates positive consumer sentiment amid economic challenges
"Amid persistent economic challenges, the passenger vehicle market experienced its most significant monthly growth in five years, indicating a potential rebound in consumer confidence," stated Brandon Cohen, Chairperson of the National Automobile Dealers’ Association (NADA) when commenting on the naamsa | The Automotive Business Council October vehicle sales report, which revealed an encouraging performance in the new vehicle market.
"The robust performance in October highlights a favourable change in consumer sentiment within this segment. Although sales in the rental industry contributed to this uplift, the sustained demand for passenger vehicles serves as an essential barometer for overall consumer trends," added Cohen.
According to naamsa, a total of 47,924 new vehicles were sold locally in October, marking a 5.5% increase compared to October 2023. Of these sales, approximately 38,520 units, or 80.4%, were attributed to dealer transactions, underscoring the vital role of franchised dealerships in supporting market stability and growth.
While October's results show promising signs, the year-to-date (YTD) figures reveal a more complex picture. Passenger vehicle sales reached 286,398 units YTD, marking a slight decline of 1.4% compared to the same period in 2023. Light Commercial Vehicles (LCVs), including bakkies and minibuses, saw an 11.7% decrease, totalling 113,300 units YTD. Medium Commercial Vehicles recorded a 7.8% drop to 6,342 units, while Heavy Trucks and Buses declined by 4.7% to 19,766 units.
The current economic landscape remains challenging for consumers, although inflationary pressures have shown a positive decrease over the past few months and interest rates are trending downwards, it will still take some time to realise the benefits associated with this.
“Affordability is still a concern for buyers,” stated the Chairperson. “This pressure is evident nationwide. We’re also witnessing competitive Chinese brands gaining traction, offering consumers affordable alternatives that are reshaping the market.”
Looking ahead, there are indicators that consumer spending could increase, partially driven by additional revenue collected by SARS through the new two-pot retirement system, which may lead to higher disposable income in the coming months. Black Friday sales will serve as an early indicator of this trend, providing insights into evolving consumer behavior as the year draws to a close.
A steady Rand could further contribute to a favourable economic environment, potentially opening the door to future interest rate cuts that would support vehicle affordability across all segments.
The global economic landscape, including the upcoming U.S. elections, will likely influence trade policies, tariffs, and taxes, all of which could impact South Africa's export market and currency stability. NADA will be closely monitoring these developments and their implications for the local automotive industry.
“The South African automotive sector continues to adapt and evolve under challenging conditions. With ongoing government support, proactive consumer engagement by our dealer network, and positive economic indicators on the horizon, we remain optimistic about the industry’s role in South Africa’s broader economic recovery,” concluded Cohen.
NADA is a proud association of the Retail Motor Industry Organisation (RMI).
