New-vehicle sales outpacing forecasts, says association

18th June 2021

By: Irma Venter

Creamer Media Senior Deputy Editor

     

Font size: - +

New-vehicle sales are continuing to outpace forecasts as the South African automotive industry recovers from the Covid-19 pandemic, says the National Automobile Dealers’ Association (NADA).

According to Naamsa | the Automotive Business Council, 38 337 new vehicles were sold in the domestic market during May. This is up 197.8%, compared with the same month last year, while also representing 7.6% growth over April sales.

Year-to-date new-vehicle sales are up 44.9% on the same period last year.

“This is very heartening, particularly the fact that dealer sales represented 87.8% of total reported new-vehicles sales in May,” says NADA chairperson Mark Dommisse.

He says strong sales through the retail dealer channel mean there is an improvement in consumer confidence, which bodes well for the remainder of the year.

“Admittedly, the figures in April and May last year were very skewed, as our members operated under stringent lockdown regulations.

“However, the ongoing upturn in 2021 is an encouraging positive.

“A year ago, dealers were resuming limited retail sales in May under lockdown Level 4, but now the market is improving significantly.”

Dommisse notes that a third wave of Covid-19 infections may, however, impact on the market negatively.

He adds that the Covid-19-related lockdown has had a devastating effect on the rental industry, which has resulted in a lack of year-old cars coming on to used-vehicle stands at dealerships.

“That is putting upward pressure on used-car pricing.

This, in turn, is impacting on the sales volumes of preowned models.

“However, it is encouraging to see that rental companies are refleeting again and, in May, these companies bought 8.2% of total vehicles and 11.4% of the passenger car volume.”

Dommisse notes that the availability of new vehicles is still limited in certain segments, mainly as a result of the global microchip shortage, which is taking longer to overcome than initially expected.


“The market continues its slow recovery in the face of a number of challenges and opportunities,” says WesBank marketing and communication head Lebogang Gaoaketse.

He warns, however, that while interest rates may remain at historical lows, price inflation, when seen against the backdrop of a subdued economy, “continues to be a barrier for many purchase decisions”.

According to the latest Vehicle Pricing Index released by TransUnion in May, new-vehicle prices in South Africa increased at nearly three times the general inflation rate during the first quarter of 2021.

When measured against WesBank’s average deal size, the group can see a similar trend in the finance required for vehicle sales, says Gaoaketse.

“Compared to a year ago, new-vehicle finance agreements through our book are now averaging a deal size of R356 313, up 11.2%, while preowned deals average R253 537, an increase of 10.6%.”

Demand for vehicle finance, however, continues “to be reassuring”, says Gaoaketse.

“WesBank’s rate of applications remains robust, indicating an appetite for new and used-vehicle purchases.

“Attractive deals on the showroom floor and a growing need for replacement, as the [ownership] cycle increased over lockdown, are contributing towards the market’s recovery.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION