New vehicle sales blitzed through the 50,000-unit volume mark in July, a feat last achieved in March 2023. The positive performance continues 10 consecutive months of increased volumes, the most recent five months registering double-digit growth. July was the best sales month since October 2019, firmly re-establishing pre-COVID-19 levels and momentum in the market’s recovery.
According to data from naamsa | the Automotive Business Council, July’s new vehicle market grew 15,6% to 51,383 vehicles. Volumes were certainly assisted by a longer-than-usual 23 selling days in the month, but driven by unprecedented demand, increased affordability, and improved sentiment.
The South African Reserve Bank’s announcement yesterday of a further 0,25% cut in interest rates continues to stimulate the market. “There remains a direct correlation between the rate-cutting cycle and the upturn in new vehicle sales,” says Lebo Gaoaketse, Head of Marketing and Communication at WesBank. “The market should continue to expect growth if interest rates remain lower.”
Gaoaketse said there was scope for a further cut before the end of the year. “With inflation well within target, an additional cut would allow the industry to potentially show double-digit growth for the year, spurring consumer and business confidence.”
The cumulative interest rate cut of 1,25% since the cycle started is saving a typical new car buyer around R257 per month*. “The sweet spot of the new vehicle market is a price point of R370,000 according to WesBank’s book,” says Gaoaketse. “More critically, the interest saving over the loan period could be over R18,500, which shows the impact lower rates have on stimulating the market and aiding affordability.”
That low-inflation economy, allowing interest rate cuts, is also relieving household budgets in other areas and providing more disposable income. “All these factors combined are assisting consumers and businesses to access finance,” says Gaoaketse. “Unprecedented levels of demand as measured by the rate of applications is driving sales and is proof of the level of confidence in the market.”
Application volumes at WesBank are more than 20% higher than they were a year ago. And volumes are being driven in the consumer space. With rental and government sales down 6,7% in July, sales done off dealer showroom floors increased 20,3%.
The market was once again driven by passenger cars, the segment up 20,1% to 36,248 units. Dealer sales (29,319 units) made up 80,9% of that volume. Light Commercial Vehicle sales increased 6,9% to 12,356 units. In tangible terms, the market sold 6,931 more vehicles than it did in July 2024.
Year-to-date sales continue in double-digit growth territory, registering 330,274 new vehicles this year, which is 13,9% up on the first seven months of last year.
“While the new vehicle market remains buoyant, consumers should remain vigilant with existing and future indebtedness,” said Gaoaketse. “Savings on existing debt will provide relief elsewhere in household budgets but may best be spent reducing overall levels of debt in the longer term.”
