New vehicle sales growth to slow to 8% this year – Naamsa

The rate of increase in new vehicle sales is expected to decline to around 8% in 2022.

This follows the strong rebound in sales of 22.1% year-on-year in 2021, after the massive sales decline of 29.2% linked to the Covid-19 pandemic in 2020.

Read: New vehicle sales in 2021 exceed expectations

Total new vehicle sales increased to 464,122 units in 2021 from 380,206 units sold in 2020.

In 2019, the year before the Covid-19 pandemic, a total of 536,612 new vehicles were sold.

Mikel Mabasa, CEO of Naamsa Automotive Company Council, said the improvement in the new vehicle market is expected to continue at a slower pace in 2022, in line with the lower projected GDP growth rate for the country.

Mabasa said that a higher and sustained national economic growth rate is essential to support higher domestic new vehicle sales volumes.

“However, with a forecast for a moderate GDP growth rate of 1.8% in 2022, the new vehicle market is expected to continue its gradual recovery during the year, but at a slower pace.

“At this point, an improvement of around 8% year-over-year in total new vehicle sales volume is forecast for 2022,” he said.

The less optimistic point of view

However, economists are less optimistic about the outlook for new vehicle sales for 2022.

Economist Mike Schüssler doubts the industry can achieve 8% annual sales growth in 2022, despite the fact that Naamsa’s forecasts are not unrealistic.

Schüssler estimates that new vehicle sales growth in 2022 will be closer to 5%.

Schüssler’s more pessimistic view is based on interest rates rising “albeit slightly”, which will affect the affordability of new vehicles; extraordinarily high fuel prices; and his belief that consumers will divert some of their consumer spending from vehicles.

He also does not believe that the semiconductor shortage will be resolved this year, which will cause the shortage of some vehicle models to continue.

Read: Chip crunch will last until 2022, Toyota supplier warns

Schüssler has said the Covid-19 pandemic “is still present and there will be tremors from time to time,” but he doubts South Africa will have another full lockdown.

“So it will definitely not be the sales of 2020, it will be the ‘plus’ sales of 2021. I think the industry will get [sales] growth but I think it will be closer to around 5%, which will still be a very good year.

“I think we have an auto market that is coming back, but I think the big rebound has happened and the market now needs to grow,” he said.

Slightly negative growth possible

Azar Jammine, chief economist at Econometrix, told Moneyweb in December that he expected very weak positive growth in new vehicle sales in 2022, and possibly even slightly negative growth.

Factors influencing this forecast include falling commodity prices on expectations of a global economic slowdown, which is driven by the emergence of new variants of Covid-19 and some countries need to reinstate lockdown restrictions, which will interfere with normal economic activity and growth.

Jammine said the International Monetary Fund (IMF) is forecasting 2.2% GDP growth for South Africa in 2022, while other organizations are forecasting growth of less than 2%.

He said growth in vehicle sales keeps pace with the growth rate of the economy, which means there will likely be barely positive growth in vehicle sales in 2022.

Long way to go …

Naamsa’s 8% forecast means the industry is unlikely to return to pre-Covid-19 sales levels this year.

Schüssler said the average monthly sales in the new vehicle market, based on a six-month moving average, have been 46,000 units over the past 16 years – but the market is currently 38,000 units.

“It tells me the market is still below par. I think there will be some improvement, but even a 10% increase in sales will not get us back to where we were, ”he said.

Schüssler said new vehicle sales will need to increase by more than 20% this year to return to pre-Covid-19 levels.

Jammine said new vehicle sales fell 29.2% in 2020 and mathematically the market is expected to grow 43% to return to where it was in 2019.

Mabasa said the performance of the new vehicle market was aligned with the country’s projected GDP growth rate of around 5% for 2021.

Raft of challenges

He said this was a very satisfying performance from an industry that has faced many challenges during 2021, ranging from disruptions in the global supply chain, to insufficient availability of models. , persistent power cuts, escalating logistics costs, as well as several domestic shocks.

Mabasa added that the surge in activity in the car rental industry, which is a major seasonal contributor to the new vehicle market, has supported passenger car sales in the second half of 2021 as the country’s economy began to open up to foreign visitors.

“Overall, market conditions in the new passenger car and light commercial vehicle market continued to be characterized by a downward trend, with used vehicle sales offering the most attractive option in the world. during the year.


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Mabasa said sales of medium and heavy commercial vehicles “also reflected signs of resilience”, with sales performance reflecting “the improving macroeconomic climate in the country.”

Resilience … and risks

The Nedbank Group business unit said the new vehicle market remained fairly resilient in 2021, facing a host of challenges throughout the year.

“Overall, this has been a year of recovery, which is expected to continue until 2022. Domestically, GDP growth of around 1.8% will support new vehicle sales, but economic growth will support a lot. higher and sustained will be necessary to shift sales to a completely superior aircraft, ”he said.

Nedbank said the threat of the coronavirus, outages and unemployment remain the most significant downside risks to the sales rebound.

He said the hurdles presented by supply chain issues, high logistics costs and semiconductor shortages are expected to persist, but the extent of the impact will depend on the highly uncertain trajectory of the virus across the globe. .

“A silver lining, especially for export volumes, includes the introduction of new models as well as a robust global recovery,” he added.


Vehicle exports increased 8.8% to 295,268 units in 2021 compared to 271,288 vehicles exported in 2020.

Mabasa said vehicle exports for the first half of 2021 were still on par with the record pre-Covid-19 vehicle export performance of 2019, but civil unrest in Gauteng and KwaZulu-Natal as well as force majeure declared by Transnet after the cyber attack of July 2021 left a major scar on the economy of the country.

He said that the upward momentum in vehicle exports had consequently halted, as the ripple effects of economic disruptions as well as the global semiconductor shortage, which also impacted the domestic production of vehicles, were visible in the industry’s export performance and the five-month decline through November 2021.

Mabasa said that taking into account the expected improvement of about 15% year-over-year in vehicle exports, an improvement in the industry’s vehicle production of about 17% is expected for 2022.

Naamsa pointed out that the auto industry is not only the largest manufacturing sector in the South African economy, but also invests billions of rand each year and accounts for around 460,000 highly skilled direct jobs in its supply chain. from the formal sector.

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