What’s driving SA’s car sales rebound?

The South African car industry has experienced a significant resurgence in sales volumes, reaching levels reminiscent of pre-pandemic times. Economic data from the Automotive Business Council indicates a notable uptick in sales, marking a shift in the industry's trajectory. Guy Kilfoil, Dealer Principal at BMW Bedfordview, sheds light on the ground sentiment and key factors driving this rebound. The surge in sales can be attributed to several factors, including pent-up demand for new cars, inflated prices in the used car market, and attractive manufacturer offers. Kilfoil notes that the price hike in used cars amidst the pandemic has incentivized consumers to opt for new vehicles, which offer competitive pricing and enticing incentives such as low-interest rates and guaranteed future value products. The trend towards new car purchases is evident, with both existing and new customers entering the market. While the premium segment faces challenges due to limited new product availability, the overall industry is experiencing a positive shift in consumer behavior. Kilfoil highlights the need for a market correction to stabilize prices, particularly in the context of increasing interest rates. He advises consumers to consider purchasing new cars at present to secure favorable rates before potential rate hikes in the future. In terms of emerging trends in vehicle sales, the industry is undergoing significant transformation driven by digitalization and shifting consumer preferences. Kilfoil predicts a surge in subscription ownership and pay-for-use models, revolutionizing traditional car retail practices. The increasing focus on electric mobility signals a transformative period in the industry, with electric models gaining popularity among consumers. The introduction of electric vehicles with substantial ranges, such as the BMW IX and IX3, is reshaping consumer perceptions and paving the way for increased adoption. Despite the progress in electric vehicle adoption, Kilfoil believes that South Africa is still a few decades behind Europe in embracing all-electric mobility. Affordability remains a crucial factor in the electric vehicle market, with battery technology advancements driving prices down. While parity between electric and internal combustion engine vehicles is on the horizon, entry-level electric cars with comparable ranges and prices to traditional vehicles are still a distant prospect. The South African car industry's resurgence signifies a transformative period marked by evolving consumer preferences, digital innovation, and a gradual shift towards electric mobility.