Election impacts on South Africa’s vehicle sales

“As expected, the general election and the accompanying uncertainty about South Africa’s future have severely impacted vehicle sales in May, with overall sales tumbling by 14.2% to a total of 37,105 units,” said Brandon Cohen, Chairperson of the National Automobile Dealers’ Association (NADA), commenting on the retail sales figures for May, which were distributed by naamsa | The Automotive Business Council today.

“The outcome of the 2024 election will undoubtedly reshape our young democracy. The next two weeks will set us on a new trajectory, regardless of whether we see a coalition, a government of national unity, or a minority government. We call on our elected leaders to prioritise the needs of the people above their own, act with maturity, and ensure stability, safety, and security for all South Africans.

“Buyers were very jittery in the run-up to the elections, leading to subdued activity, although there was a noticeable uptick in deliveries on May 30 and 31,” he added.

Motor Dealer Sales

Sales by retail motor dealers accounted for 89.4% of sales, with the rental industry’s offtake of 4.5% of total sales, well below the norm. Industry corporate fleets took 3.1% of the total, which was higher than the government’s 3% share.

All market segments experienced a decline in May: passenger car sales were down 11.7%, light commercial vehicles sold 19.5% fewer units, medium truck sales decreased by 4.3%, and heavy truck and bus sales were 17.1% lower than in May 2023.

“Consumers remain under significant financial strain, and although repo rates have been held steady for some time, current interest rate levels remain too high for many potential vehicle buyers.

Inflation

“We were pleased to see the country’s inflation rate drop from 5.3% to 5.2% last month, but it is still well above the South African Reserve Bank’s (SARB) target of 4.5% to justify a cut in interest rates,” Cohen explained.

“That said, the outcome of coalition talks will materially affect our currency and other inflationary drivers, so we need to monitor this closely. The news that the European Central Bank may soon cut lending rates is welcome, but there is a long road ahead for global economies to return to pre-COVID levels.

“On a pragmatic note, there are some positives: load shedding has been held off for two months, the elections themselves were peaceful and numerous deals are available in the market to attract buyers. Additionally, the government announced a significant over-recovery in fuel pricing, so we can expect petrol prices to decrease this month by about R1 per litre and diesel to drop by R1 per litre for 500 ppm and 90c for 50 ppm if initial numbers hold. This will provide welcome relief at the pumps and help reduce inflationary pressure,” concluded Cohen.

NADA is a proud association of the Retail Motor Industry Organisation (RMI). 

About NADA

The National Automobile Dealers' Association (NADA) is the professional body representing vehicle franchise motor dealerships in South Africa. It has 1,450 members, accounting for 85% of new franchise dealerships. The country has approximately 1,600 new franchised automotive dealerships providing direct employment to 58,000 with a multiplier effect of providing indirect employment to more than 50,000 personnel. NADA is a proud constituent association of the Retail Motor Industry Organisation (RMI) and has affiliations with similar organisations worldwide. It aims to enhance the image of the retail motor business, foster dealer-manufacturer relationships, and address members' concerns with government. NADA and its members are strong supporters of complying with the RMI and the Consumer Protection Act's Codes of Conduct for the Automotive Industry. It plays a vital role in the automotive industry, acting as the respected voice of the retail motor industry in South Africa.