Industry body naamsa | the Automotive Business Council has expressed optimism that the positive new-vehicle sales momentum of the fourth quarter of 2024 has continued into the first month of this year, and is confident that an improved economic outlook, coupled with higher business and consumer sentiment, will support the new-vehicle market.

“Aggregate domestic new-vehicle sales in January, at 46 398 units, reflected an increase of 4 375 units, or a gain of 10.4%, from the 42 023 vehicles sold in January 2024,” says naamsa CEO Mikel Mabasa.

“Export sales increased by 5 803 units, or 29.7%, to 25 348 units in January, compared with the 19 545 vehicles exported in January 2024,” he says.

Of the total reported industry sales of 46 398 vehicles, an estimated 37 799 units, or 81.4%, represented dealer sales, an estimated 14.8% represented sales to the vehicle rental industry, 2.2% to industry corporate fleets and 1.6% to government sales.

Further, the January new passenger car market at 34 530 units had registered an increase of 5 349 cars, or a gain of 18.3%, compared with the 29 181 new cars sold in January 2024.

Car rental sales accounted for 19.1%, or one out of five, new passenger vehicles sales during the month.

Domestic sales of new light commercial vehicles, bakkies and minibuses, at 9 901 units, during January represents a decrease of 993 units, or a loss of 9.1%, from the 10 894 light commercial vehicles sold during January 2024, Mabasa notes.

Additionally, sales for the medium and heavy truck segments of the industry reflected a mixed performance in January.

At 569 units, medium commercial vehicles recorded an increase of 59 units, or 11.6%, from the 510 units sold in January 2024.

Heavy trucks and buses, at 1 398 units for January, recorded a decrease of 40 vehicles, or 2.8%, compared with the 1 438 units sold in January 2024.

The January export sales at 25 348 units reflected an increase of 5 803 vehicles, an increase of 29.7%, compared with the 19 545 vehicles exported in January 2024.

“The positive start to the year, marked by higher new-vehicle sales, a further interest rate cut of 25 basis points during the month and well-controlled inflation, along with promising prospects for a significantly improved domestic economic outlook, all contribute to a sense of optimism for 2025,” says Mabasa.

The possibility of further interest rate cuts by the South African Reserve Bank (SARB) this year will enhance vehicle affordability and also foster a revival in business and consumer sentiment.

The SARB projects a notable improvement in the country’s GDP growth rate of 1.5% for this year, with some commentators projecting more optimistic figures of about 2%, he adds.

“While the inflation outlook for the second half of the year remains positive, new inflation risks, such as the anticipated rise in tariffs on trade, have emerged. The National Energy Regulator of South Africa has granted [Eskom] an electricity tariff increase of 12.74% for implementation on April 1, which is approximately three times the current Consumer Price Index rate,” he highlights.

However, early indicators suggest a potential turning point for the new-vehicle market this year, driven by stronger economic prospects, growing consumer and business confidence and improving new vehicle sales data, says Mabasa.

Vehicle exports showed promising growth in January compared with the same month in 2024. The anticipated relaxation of monetary policy in South Africa’s primary export markets is expected to sustain this momentum in the short to medium term.

“The trajectory of trade policies under the new US administration remains uncertain. It is worth noting that the success and magnitude of US tariffs could have significant spillover effects on South Africa and other markets, potentially leading to increased export revenues and inflation,” Mabasa emphasises.