New vehicle sales in April 2023 reached 1,004 units, showing a yearly increase of 10.9%, but a monthly decline of 18.1%, a new report has shown.
According to Cirrus Capital’s vehicle sales report, this is the third consecutive month that new vehicle sales have exceeded 1,000 units, but a decrease when compared to the previous month’s sales of 1,226 and 1,103 units in February 2023.
“Despite the challenges of higher interest rates and ongoing vehicle price inflation, new vehicle sales have had a strong start this year. This is surprising, given the difficulties consumers face in obtaining vehicle financing due to affordability challenges,” Enos Kamutukwata, the firm’s junior economist said.
He estimates that vehicle sales may soften for the remainder of the year due to several disruptive public holidays in May and the severe Rand weakness, which could see the South African Reserve Bank hike rates to protect the currency.
This comes as data shows that commercial vehicle sales led new vehicles for the second month in a row, posting y/y growth of 22.1% but declining by 17.7% m/m.
Passenger vehicle sales only posted marginal y/y growth of 0.4%, but fell by 18.6% m/m.
Commercial vehicle sales also exceeded passenger vehicle sales by 68 units.
Cirrus notes that rental agencies bought 52 units, a significant drop from the 113 units posted in the prior comparable month.
“Out of the 52 rental units, 37 were passenger vehicles, including the Toyota Fortuner, Toyota Starlet, and VW Polo Vivo. The remaining 15 units were light commercial vehicles, including the Toyota Hilux,” the firm said.
On a positive note, Kamutukwata reiterated that April marks the beginning of the fiscal year, and the government estimates allocating N$210 million for new vehicle acquisitions in FY ’23/24.
“With the delay in the procedures around the Government’s FY ’23/24 Appropriation Bill, higher spending on vehicles by the government has not yet begun, which should provide some support later in the year,” he said.
Meanwhile, 536 commercial vehicles were sold in April, down from 651 units in March and 544 in February. According to Cirrus commercial vehicle sales figure is still an improvement of 22.1% y/y.
“Commercial vehicle sales saw fewer light commercial vehicles being sold, declining to 473 units in April ’23 from 580 sold in March ’23. LCVs posted growth of 20.7% y/y but fell 18.4% m/m. XHVs sales were up 95.0% y/y, MCVs remained flat y/y, and HCVs sales declined by 33.3% y/y, while one bus was sold.”
The firm noted that passenger vehicle sales only saw marginal y/y growth of just 0.4% but fell by 18.6% m/m, with 468 units sold in April 2023, with Rental agencies only accounting for 37 of these units.
Toyota dominated passenger vehicle sales with 178 units, led by the Toyota Corolla Cross (52 units) and the Toyota Fortuner (30 units).
“The dominance of commercial vehicles over passenger vehicles is encouraging, given their commercial and industrial uses. This is good news for organic economic growth, particularly in the mining and manufacturing sectors. However, passenger vehicle sales (and LCVs) will benefit from government spending,” said Kamutukwata.
