Total new-vehicle sales in South Africa declined by 12% in November, to 39 315 units, compared with 44 670 vehicles sold in the same month last year.
The new-passenger-car market fell by 18.1%, to 25 707 units, with the car rental industry accounting for 11.6% of car sales in November.
Domestic sales of new light commercial vehicles, bakkies and minibuses gained 5.3% in November, to 11 243 units.
Medium truck sales, at 664 units, were down 9.5% compared with November last year, while the heavy truck and bus market declined by 8.4%, to 1 701 units.
November new-vehicle export sales, at 31 966 units, fell by 7.6%.
The National Association of Automobile Manufacturers of South Africa (Naamsa) says there has been a “steady, small recovery” in the new-vehicle market in recent months, but it believes that “real growth” is still some way off.
“The economic scars of the Covid-19 pandemic are extreme and the domestic, as well as global, economic environment will remain uncertain and volatile over at least the next six months, until safe and effective coronavirus vaccines are available and rolled out in South Africa and around the world.”
Vehicle finance house WesBank concurs with Naamsa that there is some positive movement in the new-vehicle market, especially as vehicle sales in November continued to increase for the fifth consecutive month.
“Amidst an overall market down 30.6% year-to-date, November’s sales performance shows signs of resurgent consumer demand and relief for motor retailers as volumes continue to increase.
“In essence, November sales doubled-up the performance increase over October (down 25.4%), to close 12% down on November last year.”
“Generally, we have recovered to about 70% of pre-Covid-19 volumes,” says WesBank Vehicle and Asset Finance marketing and communication head Lebogang Gaoaketse.
“While it would be unrealistic to expect the market to return to 100% in the short to medium-term, the industry has adapted quickly to the new levels of demand to remain sustainable and continue contributing towards [South Africa’s] economic recovery.”
Working From Home Lengthening Replacement Cycle
WesBank CEO Chris de Kock says that new blended working arrangements, implemented as a result of the Covid-19 pandemic, have reduced the demand for consumers to own cars.
“For those who do [own cars], it is likely that their annual mileage will reduce considerably, increasing the time between replacement cycles. The South African economy will simply not be able to support a market of 500 000 vehicles per year.”
De Kock says there are two significant trends at play, both centred around affordability.
“Consumers are clearly seeking to reduce their monthly instalment by buying a more affordable vehicle.
“The evidence of this can be seen in the market growth of the new-car segment offering lower-priced vehicles, where customers seem willing to substitute high profile brands for more practical and affordable options.”
Contributing to this trend is the increase in new-vehicle prices, now averaging close to double-digit inflation this year.
“The other trend is the shift towards the used-car market, again driven mostly by the buydown effect,” says De Kock.
Used Cars in Short Supply
South Africa’s hard-pressed motor dealers are cautiously optimistic about the future, says the National Automobile Dealers’ Association (Nada).
“Even though retail sales figures remained muted in November . . . the general feeling among dealers is that they are slightly more hopeful than they were a few months ago,” says Nada chairperson Mark Dommisse.
“What we need to know now, is what direction government is going to take to handle the growing number of coronavirus infections, while still preserving a recovering economy.
Dommisse adds that the pricing of used vehicles is currently holding up well, but notes that Nada is concerned about a decrease in the supply of these vehicles.
He believes this shortfall will continue into 2021.
“Another problematic area is the backlog in renewing vehicle and drivers’ licences, as well as the threat of rigorous Administrative Adjudication of Road Traffic Offences regulations taking effect without amendment, which will have far-reaching negative outcomes for the motor industry,” says Dommisse.
He adds that Nada is also aware that the pandemic has altered the way people travel.
“[We] anticipate ongoing changes in the commute between home and work into the future.”
Naamsa noted this week that the implementation date for government’s auto industry support programme, the Automotive Production Development Programme Phase 2, has been set for July 1, next year.