The sale of new energy vehicles (NEVs) in South Africa continues to ramp up aggressively to catch up as the world moves towards more sustainable modes of transport.
This comes as aggregate new vehicle sales during the third quarter 2024 increased by 15.0% compared to the second quarter 2024, but recorded a decline of 2.4% compared to the corresponding quarter 2023.
The Automotive Business Council (Naamsa) today said the slight year-on-year decline continued to reflect the multiple pressures in the economy, making affordability a significant factor in purchasing decisions.
“The uptick in overall July 2024 new vehicle sales could unfortunately not be sustained during the remainder of the third quarter,” said Naamsa in its Quarterly Review of Business Conditions Report for Quarter 3.
“The volume passenger car segment, however, trended upward during the quarter, supported by seasonal sales to the vehicle rental industry as well as an increase in sales of selected imported brands. The quarter-on-quarter growth suggests some pent-up demand being realised but also merely just a poor second quarter performance.”
Additionally, Naamsa said that NEVs sales by 17 industry brands increased by 88.0% to 3 824 units during the third quarter 2024, up from 2 034 units sold during the same period last year.
This followed a 169.8% increase during the second quarter 2024 compared to the second quarter 2023.
NEV sales increased by 65.8% to 7 783 units in 2023 compared to the 4 694 units in 2022 and breached the 1% mark for the first time in 2023, comprising 1.47% of the total new vehicle market compared to 0.88% of total new vehicle sales in 2022.
Naamsa said that this trend, although from a low base, indicated a stronger shift toward sustainable mobility in South Africa, aligning with national environmental goals along with the growth in affordable imported EVs brands.
The appeal of these more budget-friendly NEVs options will continue to drive further growth in the NEVs segment.
“As the world moves towards more sustainable modes of transport, aligning South Africa’s automotive policies with these trends is essential for the long-term success of the automotive sector,” Naamsa said.
“The Department of Trade, Industry, and Competition’s Electric Vehicle White Paper, unveiled in December 2023, outlines a comprehensive electric vehicle roadmap for South Africa and the structure of a suite of policy interventions tailored to the automotive industry.”
The primary goal of the White Paper is to set a course to transition the automotive industry from primarily producing Internal Combustion Engine [ICE] vehicles to a dual platform that includes electric vehicles [EVs] in the production and consumption mix, alongside ICE vehicles in South Africa by 2035.
The automotive industry sees the introduction of an investment allowance for new EV investments, as announced in the February 2024 Budget Review, set to commence in March 2026, to claim 150% of qualifying investment spending in the first year, as a crucial step in attracting investments, fostering innovation, and enhancing the growth of the sector within South Africa.
Following the release of the EV White Paper, Naamsa continued to propose for the inclusion of hybrids and plug-in hybrids as well as a NEV demand stimulus for market adoption before localisation to ensure that the APDP2 continues to drive growth and transformation in the South African automotive industry.
In his keynote address to the SA Auto Week in October, President Cyril Ramaphosa said the government was working to finalise comprehensive NEVs policy guidelines that do not exclude alternative technologies such as hybrids and plug-in hybrids.
“Consideration must be given to incentives for manufacturers as well as tax rebates or subsidies for consumers to accelerate the uptake of electric vehicles. This is not just about creating a greener future but also about ensuring South Africa remains competitive in the global market,” Ramaphosa said.
BUSINESS REPORT
