Ever since we experienced Covid 19 five years ago, new car sales have been struggling.
People are rather opting for pre-owned.
But are we coming out of the woods and likely to see that change? Yes, there is light at the end of the tunnel.
According to the Automotive Business Council-Naamsa, things are likely to turn up for the better this year.
Naamsa expects the South African new car market to return to pre-pandemic levels.
In a statement, the Automotive Business Council said that the confluence of positive economic indicators and the resilience of the volume passenger car segment during the last quarter of 2024 suggests a potential rebound for the new car market in 2025.
“The South African Reserve Bank’s two interest rate cuts towards year-end, the first in four years, coupled with easing inflation, has created a more favourable economic environment,” said Naamsa.
It said that lower fuel prices are said to have bolstered consumer confidence and disposable income as petrol prices were at the lowest point they have been in nearly three years in 2024.
They added that further interest rate cuts in 2025 would support car affordability across all the various segments.
“The domestic outlook for 2025 is expected to improve, driven by a revival in business and consumer sentiment stemming from improvements in the country’s key economic indicators,” Naamsa said.
According Naamsa, SARS stated that risks to the country’s growth outlook are assessed to be balanced, but that growth could be higher from 2025 onwards, given ongoing reforms, especially in the network sectors, such as electricity and transport.
They said that with an improved GDP growth rate of around 1,5% projected for 2025, the new car market would likely improve by single digits compared to the level of 2024.
“Any escalating trade tensions are likely to impact US interest rates and drive the Dollar higher. However, the expected ongoing easing of monetary policy in the South African automotive industry’s key export markets could see the vehicle export momentum turn positive again over the medium term,” concluded the statement.
