Although new vehicle sales are ticking upwards, with November having seen a second consecutive month of growth, many consumers appear to be holding out for further interest rate reductions, while those that are taking the plunge are opting for less expensive vehicles.
For similar reasons, demand for used vehicles remains strong. However, many potential buyers appear to be testing affordability or exploring their credit options without actually committing to purchases, says Thembinkosi Pantsi, Vice-Chairperson of the National Automobile Dealers’ Association (NADA).
“The recent interest rate cuts may have encouraged some optimism, but many buyers are adopting a wait-and-see approach as they assess future rate movements,” Pantsi said.
WesBank’s marketing head Lebo Gaoaketse said the vehicle market would need to find a lot more momentum before it could rest easier on a recovery path.
Gaoaketse said inflated household budgets continued to keep consumers under severe pressure.
“The average deal size financed by the bank is 6% lower year-on-year for new vehicles, indicating affordability concerns amidst new car price inflation. In addition, despite sales being significantly higher than a year ago, demand as measured by applications has softened substantially.”
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The second interest rate cut, announced in November, has been widely welcomed by consumers, who are hoping for the trend to continue.
“In addition, the energy crisis is seemingly under control, inflation lower for five consecutive months, the currency performing better, and fuel prices contributing to budget savings – but all this positive impetus will take time to filter through to overall market performance and general consumer affordability,” Gaoaketse said.
NADA’s Thembinkosi Pantsi added that dealers were cautiously optimistic about a strong end to the sales year.
“With some stock available in key segments and marketing support from manufacturers expected, there is potential for a positive finish to the year,” said Cohen.
“The strong rental industry sales signal a promising festive season, which we hope will set the stage for a better trading year in 2025.”
IOL