The South African automotive landscape – especially when it comes to consumer buying behaviour – has changed more in the last year than in the last few decades, says AutoTrader CEO George Mienie.
Accordingly, the industry has had to adapt like never before in order to survive and prosper during this volatile time, he adds.
“This has been one of the most disruptive years in the history of the automotive industry, as [the Covid-19] lockdown has seen both production volumes and sales tumble.
“This is a global phenomenon. International industry analysis firm Counterpoint Research is predicting a global automotive sales outlook of around 72-million units for 2020 – a 20.1% decline against 2019.
“In South Africa, the situation is similar – the used-car market is estimated to have lost more than R16-billion in sales as a result of lockdown in just three months versus 2019, representing a 56% decline in unit sales year-on-year.”
While sales volumes may have dropped at the start of lockdown, an analysis of AutoTrader data – the largest digital automotive marketplace in South Africa – revealed that consumer interest in buying a used car did not match this decline.
Mienie says the focus of the in-market car shopper simply shifted, if not, intensified.
While the auto industry all but ground to a halt under Alert Level 5, car shoppers seemingly became insomniacs, with online car searches increasing by 78% between 1 am and 2 am.
Buying patterns were further altered under Level 4.
“Faced with the economic challenges of lockdown, South Africans demonstrated their entrepreneurial spirit,” says Mienie.
“Some people started sewing and selling masks, for instance. Based on AutoTrader search statistics, others entered the delivery arena.
“There was a sharp increase in searches for both small and big vans during Level 4. It’s likely that South Africans saw the opportunity (or necessity) for a delivery offer.”
The need for financial survival was reflected both in Alert Level 4 and at the start of Alert Level 3.
“From May 1 to June 7, searches for second-hand cars under R50 000 increased by almost 300% versus normal pre-lockdown levels,” says Mienie.
“It was clear that we were seeing the downtrading of cars, in a bid to protect finances.”
As Alert Level 3 became the new norm, searches for cars R100 000 and less, or R200 000 and less, started becoming more popular again.
“R100 000 searches increased by 22% and R200 000 searches increased by a whopping 51%,” notes Mienie.
“This was probably due to industries opening up and people going back to work under Alert Level 3. I believe this also accelerated the swing from new cars to used cars by consumers still under financial pressure.”
During Alert Level 3, AutoTrader also saw an emphasis on personal – as opposed to shared – mobility.
“Before the lockdown, a Google Trend report showed year-on-year increases in searches for the keyword ‘Uber’, serving as a proxy for the public’s growing demand for ride-hailing services,” notes Mienie.
“However, in July, consumers pivoted to personal mobility, evident in consumer-related searches for AutoTrader outpacing Uber. To date, this is a trend that has continued, leading us to believe that consumers feel safer in their own cars.”
The emphasis on personal mobility has also seen South Africans aged between 18 and 24 – commonly known as Generation Z – showing a new-found enthusiasm for learning to drive and owning a car.
In fact, their interest in cars has tripled in South Africa since the start of lockdown, with traffic by this demographic on AutoTrader having risen by 293% since the start of lockdown.
Alert Level 3 also saw used-car inventories – especially when it comes to 2019 year models – increasing by 32% in July compared with the previous month, placing buyers firmly in the pound seat.
As the year moves to a close, Mienie says he is pleased to see the market recovering, albeit slowly.
“New and used-vehicle sales are picking up. While neither the new nor the used markets are trading at 2019 levels, this is positive news indeed, and a very good way to end what has been a challenging year.”