• September 24th, 2020

Depressed vehicle sales expected to remain under pressure



The majority of local car dealerships have bemoaned lacklustre sales, with many saying the industry was already suffering before the Covid-19 lockdown in March due to the ongoing recession. And while sales have started picking up for many car dealerships as the lockdown subsides, the latest figures from the National Association of Automobile Manufacturers of South Africa (NAAMSA) confirm a substantial decline in vehicle sales. 

The latest NAAMSA figures for May 2020, which include sales in Namibia and have traditionally been an excellent barometer of economic activity, show that new vehicle sales recorded a substantial decline of 27 496 units or 68% from the 40 428 vehicles sold in May last year compared to the aggregate domestic sales of 12 932 units in May 2020.  While this was a noteworthy improvement from the April 2020 performance it is still not where car dealerships want to be in a recovering economy. Similarly, although South African vehicle export sales, at 10 819 units, also registered a significant fall of 19 333 units or a decline of 64.1% compared to the 30 152 vehicles exported in May last year, this was an improvement on April 2020 considering that many vehicle manufacturers will only commence production in June 2020.

“Trading conditions remain tough and have been exacerbated by high levels of household debt coupled with a struggling exchange rate that is also pushing up prices,” commented Anton Westraadt, Franchise Director at Pupkewitz Motors. Responding to questions by Woema, Westraadt confirmed that the market share for Pupkewitz Motors remains the same but cautioned that he expects trading conditions to remain under pressure for the remainder of the year.  Also commenting on recent figures, the Sales Manager at Spes Bona Mahindra, Xavier van Wyk, confirmed a drastic reduction of sales since the advent of the State of Emergency and Covid-19 lockdown. However, he noted that sales are slowly but surely picking up, saying: “We are doing relatively well considering the circumstances”. Van Wyk also stated they are operating at between 60% to 75% of normal sales, which “is not where we want to be”. 
An exception to prevalent opinions is Rassie Rietz, Sales Manager at M&Z’s Motors Jeep division, who yesterday said he has had the best month of sales thus far. Rietz’s explanation for a larger influx of customers is that “perhaps customers who were hesitant before the lockdown are not hesitating anymore”. 

Meanwhile, a breakdown of the latest NAAMSA figures indicate that out of the total reported South African and Namibian industry sales of 12 932 vehicles, an estimated 11 289 units or 87.3% represented dealer sales, 7.9% sales to government, 2.9% to industry corporate fleets, and an estimated 1.9% represented sales to the vehicle rental industry. 
Overall, the May 2020 new passenger car market registered a substantial decline of 17 083 cars or a fall of 65.4% to 9 019 units compared to the 26 102 new cars sold in May last year. 

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 3 073 units during May 2020 had recorded a huge decline of 9 128 units or a fall of 74.8% from the 12 201 light commercial vehicles sold during the corresponding month last year. 
Sales for medium and heavy truck segments of the industry also remained weak and at 304 units and 536 units, respectively, reflected a substantial decline of 379 vehicles or a fall of 55.5% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses a huge decline of 906 vehicles or a fall of 62.8% compared to the corresponding month last year. 

However, NAAMSA noted that the performance of vehicle exports over the course of 2020 remains linked to the duration of the Covid-19 pandemic and its impact on the global economy. New vehicle sales for May 2020 continue to reflect persistent demand weakness due to the impact of the Covid-19 pandemic as consumer and business sentiment remain severely depressed.  According to NAAMSA the motor industry is currently experiencing unchartered conditions given the current unpredictability in these uncertain times. New vehicle sales are generally linked to the strength of the economy and the anticipated extent of the negative annualised GDP growth in South Africa and the region does not bode well for the industry over the medium-term. 

“Under normal market circumstances positive indicators such as sharp petrol price decreases, substantial interest rate drops, below-inflation vehicle price increases, dealer incentives and low inflation would support the new vehicle market. However, how far these dynamics will move consumers and businesses into new vehicle purchases over the balance of the year remains unclear. Suffice to say, the impact of Covid-19 on the new vehicle market and when the level of factory output will return to where it was before the lockdown will only become clearer once the entire motor industry becomes fully operational and prepares itself for the ‘new normal’”, read a statement from NAAMSA. 
The association continued that vehicle export performance remains reliant on the performance and direction of global markets. 
“The industry’s export sales for the year will most likely be affected by the projected fall in global vehicle demand as a result of the impact of Covid-19”, the NAAMSA statement concluded. 


Edgar Brandt
2020-06-18 09:33:35 | 3 months ago

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