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Industry experts optimistic as auto sales show signs of improvement

The auto industry has begun to see an upturn in sales after seven months of steady decline.

While January experienced a sluggish start, February’s figures exhibited notable improvements in terms of volume sales – offering a glimmer of optimism for the industry.

Although there was still a minor dip by 0.9% compared with last year, this was largely perceived as progress over previous downturns.

According to statistics provided by naamsa | The Automotive Business Council, new vehicle sales recorded for February amounted to 44,749 units – indicating an encouraging ascent of 6.9%, or 3,113 additional units from January’s figures.

This consequently places current new vehicle performance at just 1.7% adrift from the year-to-date comparisons against the given stats from 2023.

“February marked the month with the least pronounced decline within our seven-month downward growth trajectory,” reports Lebo Gaoaketse, Head of Marketing and Communication at WesBank.

He further notes that “The previous month showcased a commendable performance, slightly surpassing the typical monthly returns accumulated over the past year.”

However, WesBank cautions against conflating consistency with sustainability.

“Although February sales displayed a dip, these figures nonetheless demonstrate reassuring levels of stability in volume terms spanning back to 18 months,” asserts Gaoaketse. “Yet expectations for first half sales predict difficult trading conditions across the industry; consequently anticipations for sustained growth should be tempered for at minimum the next quadrimester.”

Relative to alternative industry sectors, the passenger car segment maintained a moderate performance in February, even though anticipated consecutive declines led to a 3.1% decrement in unit registrations within this period, when juxtaposed with prior figures.

This rate of registration was substantially lower than January’s count– an indication of considerable repercussions on operational productivity notwithstanding observed market enhancements from the preceding month.

As for Light Commercial Vehicles (LCV), their sales ascended by 2.5% to reach a total of 13,306 units traded.

This rise represented a significant increase by an impressive tally of 2,412 units when compared to January’s numbers- equating into a robust increment of 22.1% on monthly basis.

“The challenging trading conditions witnessed in the first half have been shaped by a multitude of factors, including consumer and business uncertainty ahead of elections, persistently high interest rates, escalating fuel prices, and inflation gravitating towards the higher end of the target spectrum,” states Gaoaketse.

Despite these seemingly adverse preconditions on new vehicle sales, there has been an 8.4% increase in applications for finance at WesBank—a testament to a strong demand.

Gaoaketse presents an optimistic outlook for 2024’s market performance: “Despite prevailing economic circumstances, February’s sales figures paint an encouraging picture—signifying a more significant demand than production output during H1. This trend could potentially bolster market expansion by H2.”

He emphasizes that with due control over currency fluctuations, inflation level and fuel prices—possible interest rate cuts may be forecasted later this year thereby stimulating growth to meet robust demand levels.

Suffice to say; such positive movement would significantly augment overall economic vitality and new vehicle sales.”

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