2025 to see 50% of cars sold online in SA, return of Chinese brands

8th March 2018

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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More than 50% of new cars will be sold online in South Africa by 2025, says Auric Auto BMW chairperson Eric Scoble.

Scoble is a former National Automobile Dealers’ Association chairperson.

He spoke at the Dealer Performance Conference, held at Kyalami this week, in his personal capacity.

Scoble expects 75% of new-vehicle sales by 2025 to be to indian, coloured and black Africans. Around 50% of sales will be to blacks. 

According to 2017 Stats SA numbers, fewer than two out of ten black households own a vehicle in a working condition.

Scoble also predicts that entry-level vehicle sales will continue to soar by 2025, partnered with a resurgence of Chinese brands in South Africa, following a largely unsuccessful first launch attempt in the domestic market.

The Chinese will also corner the market for affordable electric vehicles.

Hybrid cars will make up a significant slice of the luxury market.

Scoble also expects service plans to be sold separately from new vehicles by 2025.

A market upcycle between 2020 and 2024 could drive the South African new-vehicle market to more than 700 000 units a year, up from the 557 600 units sold in 2017. A domestic annual market of more than a million vehicles – as touted a few years ago – is “simply not possible”, he notes.

When considering dealerships specifically, Scoble says virtual reality and online sales will mean the end of big ‘Taj Mahal’ dealerships by 2025.

He does not expect dealerships in 2025 to carry rows of cars parked on a showroom floor.

“Today’s dealerships are dead.”

Scoble believes the industry requires smaller dealers that do not act as storage yards.

“They need to be interactive, touch and feel.”

In light of increased online buying, Scoble also predicts the end of the car salesperson by 2025, with the need shifting more towards someone able to put a financial deal together.

Taking a more short-term view, Scoble believes the rand will maintain its current strength until before the 2019 national elections, with the first half of next year “a political battleground” that may scare off investment.

He expects a reduction in the interest rate of 1.5% points over the next 12 months.

South Africa’s economic growth should reach 1.8% this year.

New-vehicle dealer sales should increase by between 6% and 8% in 2018, owing to pent-up demand in the market, lower interest rates and stronger economic growth.

Scoble also expects sales of compact and affordable sports-utility vehicles to “grow dramatically”, with sedans to disappear from the private garage.

 

Edited by Creamer Media Reporter

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