If January sales had started with the choke on; February sales appear to have settled into a smoother idle.
Although still down 0,9% year-on-year, second month sales were significantly improved over January in volume terms, providing some hope for the industry that has experienced seven consecutive months of volume sales decline.
According to figures released by naamsa the Automotive Business Council, new vehicle sales for February came in at 44 749 units, up a respectable 6,9% (3 113 units) on January’s performance. It means new vehicle sales are tracking 1,7% down on 2023 performance year-to-date.
“February sales were the smallest decline in sales over the past seven consecutive months of negative growth,” says Lebo Gaoaketse, head of marketing and communication at WesBank. “The month also represented a fairly robust volume, which was slightly higher than the average monthly sales last year.”
But consistency shouldn’t be confused with sustainability, warned WesBank.
“Despite February sales being down, they do display some reassuring levels of consistency in volume terms over the past 18 months,” says Gaoaketse. “But first half sales are expected by industry to trade in tough conditions, meaning the sector shouldn’t expect any form of sustainable growth over the next four months.”
Passenger cars faired relatively well in February, their expected and continued decline in sales recording 3,1% fewer registrations in the month. The 28 857 volume was down compared to January, too however. This indicates a more heavily impacted performance given the overall increase in performance of the market over the previous month.
Light Commercial Vehicles (LCVs) were up 2,5% to 13 306 units. This was a significant 2 412 units more than the segment in January, or 22,1% month-on-month.
“Those tough first-half trading conditions are impacted by consumer and business uncertainty in the lead up to elections, continued economic headwinds of high interest rates and fuel prices and inflation that has edged more towards the upper end of the target scale,” says Gaoaketse.
Yet, while these conditions seem unfavourable for new vehicle sales, applications for finance at WesBank were up 8,4%, indicating a robust level of demand.
“The optimistic view of the market for 2024 would consider February sales as a reassuring volume despite the conditions enjoying higher levels of demand than performance during the first half, which would allow improved market growth during the second half,” says Gaoaketse.
“If the currency, inflation and fuel prices could come under control, interest rate cuts could be expected later in the year, stimulating growth and meeting those levels of demand. That would be good news for the overall economy and new vehicle sales.”