Different trends in different times

With the July monthly sales figures recently released, Dealerfloor chatted to Mark Dommisse, Chairperson of the National Automobile Dealers Association (NADA) about the current situation of the car market.

Mark Dommisse

1: The market is still struggling, is there a trend to buy down when buying new?

There are signs of a trend now with many new vehicle buyers leaning towards mid- to low-end-priced vehicles. However, on the back of new vehicle price increases from the weakening rand, there are currently attractive buying opportunities in new cars across all ranges.

Fuel prices have recently increased, but they are still lower than before lockdown started, and it is certainly a factor in decision-making processes. This, coupled to the lowest interest rates we have seen in decades, will also create buying opportunities for consumers. We are hoping that this trend continues for the balance of the third quarter.

2: Do people also move their money towards used cars instead of new ones at this stage?

The demand for used vehicles is increasing as cash-strapped consumers seek ways to maximise their disposable income in these difficult times. It is worth noting, however, that this trend is putting strain on motor retailers to cope with the number of trade-ins as they simply don’t have the financial resources to pay out value differences on traded vehicles.

The situation is similar for customers looking to completely exit finance arrangements, as dealers would need to settle these accounts. Additionally, more and more people are becoming cautious about travelling in public transport, so the increase in used vehicle sales could be attributed to those consumers wanting to purchase a vehicle but looking at more affordable options.

3: How big is the hold back in new sales from the renting and fleet industry and is this directly linked to the lockdown phase we are currently in?

NADA’s view is that owing to the hospitality and tourism sector still being under lockdown restrictions, the car rental industry has no capability to support the market in the way it normally would. We anticipate that this situation will continue as long as the tourism market remains subdued.

This is not an area where retail motor dealers participate, as it falls directly under the auspices of the manufacturer or importer.

4: What, if anything, should we read in the slight increase in sales of LCVs?

It is difficult to say at this stage. We would need to track these sales for a few more months to understand any developing trends and to locate where the increased interest is coming from.

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