Dealers selling to customers in the agricultural market can expect improved sales as the recent heavy rainfall hold promise for bumper crops.
This is the outlook of Miyelani Maluleke, a senior economist at ABSA, when prompted on the latest developments in the domestic agricultural sector.
“Not only are crop prospects looking strong, but crop prices have also risen in recent months, putting farmers in a much better financial position this year,” Maluleke told Dealerfloor. “Although we could see some spending in the auto sector, farmers are also likely to use the better financial performance to reduce the debt they accumulated in the past challenging year or two,” he warned.
According to the South African Weather Service (SAWS), seven out of the nine South African provinces recorded above-average rainfalls in January, including the major maize-growing regions of Mpumalanga, Free State and North West. Thanks to the La Nina phenomenon, dam levels were on average 87.9% full, compared to 62.0% in the same week last year.
Data published by the Crop Estimates Committee at the end of January confirmed that the total summer grains planting for the 2021 season had risen by 6% compared to last year. The recent favourable weather conditions will likely support yields and financial gains for most farmers.
This could be some respite to dealers, since the latest TransUnion SA Vehicle Pricing Index (VPI) is predicting a challenging 2021 for the automotive industry with new vehicle prices continuing to climb way above the inflation rate.
Rudi Boonzaaier, Dealer Principal at Waterberg Toyota in Bela-Bela, agrees. “We have a number of farmers as customers and according to them the feedback also promises record yields. The income of farmers will greatly depend on who signed contracts too soon and who waited,” he told Dealerfloor.
Boonzaaier did also explained that as a dealership doing business in a farming community, they will always be part of the community and can count on their support during challenging as well as prospering times.
Adelene le Roux, DP at Morgan Nissan Lydenburg, believes that the ample rains in the Lydenburg area recently brought a joyous and happy mood to the people in the area. “We are truly blessed that our farming community always supports us, no matter the circumstances, just as we are part of a community continuously striving to grow and development,” Le Roux told Dealerfloor.
“At Morgan Nissan Lydenburg we have a strong focus on supporting our farming community and deliver exceptional service to save them time and money,” she said. “We see ourselves as their right-hand auto dealer and fortunately our stalwart NP 300 4x4 s/c is a regular first choice.”
The automotive industry and the agriculture sector have become intertwined and it seems true that most dealerships operating in the rural, farming areas is looking towards the skies for rain just as much as the farmer.
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