The South African motor industry is in an extremely weird phase right now. The transport sector defied expectations of under-performance in the fourth quarter of 2022 to be the best sectoral performer and all indications are that the transport sector once again outperformed other sectors of the South African economy during the first quarter of 2023. Statistics South Africa is expected to release the real first quarter GDP growth rate imminently, with expectations of a small positive quarterly growth rate allowing the economy to avert a technical recession.
Although we might just dodge the official recession classification the average South African is certainly feeling the pinch, a situation that is only being made worse by a variety of additional factors including political instability and widespread loadshedding. However, for some reason the local motor industry remains largely unaffected.
The commercial vehicle industry is currently rolling out product on an almost weekly basis. Just this month Volkswagen launched the Amarok single cab, UD’s Croner bus hit the road and Hino entered the extra-heavy segment with their 700. As we went to print Volvo launched their electric trucks to the South African media and we will bring you all those details in the next issue.
Vehicle sales reflect the same with Lightstone reporting that overall sales for the first quarter of 2023 were 1.7% higher than for the comparable period in 2022, and 20% above sales for the same window in 2021. Probably more significantly, new vehicle sales are, so far in 2023, 3.1% ahead of the Q1-2019 volume, a sign that the market has essentially recovered to pre-COVID levels.
The commercial vehicle market continued to perform strongly in May and on a year-todate basis sales are up 13.9% from 63 723 units to 74 862 units in the five-month period. The LCV market improved by 14.4% on a YTD basis with 62 567 units. Sales in this highly competitive segment rose by 38.5% to 12 825 units in May.
While the South African economy might be a difficult place to survive and do business in at the moment, people need to move and businesses need to move goods and the transport industry seems to be more resilient than other sectors for the time being.
Fuel price relief
While international product prices are edging higher and the Rand remains weak against the US dollar, fuel users in South Africa will welcome some relief even if it is less than was initially predicted. On the 7th of June both grades of petrol decreased by 71 cents, while diesel decreased by 80 cents (50ppm) and 84 cents (500ppm) respectively.
Decreases in the price of diesel are especially welcomed given that the fuel accounts for significant input costs across all sectors, which are often passed on to the consumers. Let’s hope this is the start of a continued decrease in fuel prices.