By Mpho Dipela, Director and Shareholder of Royale Energy and LMG
In some positive news, the South African automotive sector has proven its resilience over the past year, continuing its encouraging post-pandemic recovery despite numerous headwinds – a trend that also bodes extremely well for 2023.
Statistics from NAAMSA reveal domestic new-vehicle sales bounced back an impressive 13.1% in October from 386,754 in the year to date (YTD) in 2021 compared to 437,467 in 2022. New passenger-vehicle sales also soared to 30,597 in October this year – a 10.4% leap from the same month in 2021.
The automotive industry has been in constant evolution since its inception in the 1800’s. New technologies and trends appear every year, like how vehicles are powered, driven and shopped for.
As Legacy Motor Group (LMG), a black-owned automotive retail group responsible for five BMW dealerships across the country, I believe it is essential that we take these trends into consideration.
- Rise of electric vehicles
According to the International Energy Agency, for example, just 120,000 electric vehicles (EVs) were sold worldwide in 2012, compared to the new record of 6.6 million sales achieved in 2021 – with electric cars representing nearly one in ten of all car sales globally. According to Top Auto and NAAMSA there has been a positive uptrend in electric vehicle (EV) adoption by South African car buyers.
NAAMSA say that if sales continue as they have been throughout the first half of the year then South Africa might see more than double EV sales compared to last year. This trajectory indicates the popularity of these vehicles especially as technology evolves and the vehicles become cheaper. By 2023 it is expected that EV’s will make up a significant segment of new car sales.
Customer preferences are increasingly shifting towards sustainability, and BMW’s electric vehicle models have made huge strides in this regard. The technology has come a long way in terms of battery lives and the distances achievable.
- The Rise of Autonomous Vehicles
Digital technology has been integrated into the automaking industry, as they keep up with global trends. Tech companies like Tesla are also starting to work on electric and self-driving vehicles.
A trend we can expect in 2023 is autonomous vehicles becoming more popular. Companies are investing in self-driving cars which have shown to be safer, reduce downtime, and reduce driver’s fatigue and negligence-related accidents. They improve fuel efficiency by 10% and reduce CO2 emissions by 42 million metric tons annually.
- The Decline of Traditional Car Ownership
Surprisingly traditional car ownership is on the decline. This is due to alternative ownership models such as ride-hailing and car sharing, which is when two or more people use the same vehicle with short-term access.
Sharing has increased in popularity in recent years, and this is a trend expected to continue in 2023 as more and more people start turning towards alternatives for their transportation needs. Even more companies are starting to offer shared mobility options as a creative, affordable and convenient alternative to vehicle ownership.
- The car buying experience from a dealership
Vehicle manufacturers are all looking at the Tesla model of selling direct to consumers, with no marketing budget as the future of automotive retail. The new model for dealerships does not necessarily mean owning the vehicles but rather to act more like an agent, collecting a commission on vehicles sold. A dealership will then become a place to go to learn about different models or to ask questions about owning and operating a vehicle.
Over the next few years, the automotive industry is expected to change significantly with electric vehicles and self-driving technologies. Looking ahead, I believe BMW is particularly poised to gradually seize market share in premium segments through the development of its electric and new energy vehicles (NEV). In 2021, for example, NAAMSA reveals that demand for electric vehicles leapt by 136.9% and demand for traditional hybrids surged by 304.5% compared to 2020.