Car sales show signs of recovery

New vehicle sales registered in November 2020 showed some signs of better months to come, with sales again improving month-on-month since the COVID-19 lockdown.

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Total domestic sales declined by 12% to 39 315 units in November from the 44 670 vehicles sold in the same month last year. But this is a significant improvement on the 25.4% year-on-year decline in total sales in October 2020.

An estimated 85.3% of total sales represented dealer sales, 8% sales to the vehicle rental industry, 3.9% sales to the government and 2.8% to industry corporate fleets. In comparison, the car rental industry in November 2019 accounted for 15.9% of total sales.

Absa Vehicle and Asset Finance head of strategy and business analytics Henry Botha says the 8% sales to the care rental industry “is quite good considering all relevant factors”.

“It is quite a good recovery from what it was last month and the month before that. If you think about the December holidays that are coming up, there are purchases that need to happen to stock up on the vehicles that are available at airports and other tourist attractions,” he said.

Botha believes there are some supply issues coming through and the demand for a new vehicle is higher than what the supplier is able to provide. He said there is a step change on how many cars will be sold per year, which also happened after the global financial crisis, with a recovery required before new car sales can get back to pre-COVID-19 levels.

“So in 2021 there will be a step change. It won’t be the same level as 2019 and then about three later we should get to the 2019 level of car sales,” he said.

Have a look at an overview of the Naamsa vehicle sales here: AVAF Infographic NAAMSA Nov2020

Figures released on Tuesday revealed that new passenger car sales dropped by 18.1% to 25 707 units in March 2020 from the 31 403 new cars sold in the same month in November 2020. Domestic sales of new light commercial vehicles, bakkies and mini-buses increased by 5.3% to 11 243 units from the 10 676 units sold during the corresponding month last year.

Sales for medium commercial vehicles declined by 9.5% year-on-year in November 2020 to 1 701 units while heavy truck and bus sales declined by 8.4% to 1 701 units.

National Association of Automobile Manufacturers of South Africa (Naamsa) CEO Mikel Mabasa said the steady small recovery gains in the new vehicle market over recent months is a positive development but real growth is still far away.

“With low inflation, marketing incentives available on new vehicles as well as interest rates expected to remain low for quite some time, it is actually a good time to purchase a new vehicle.

“However, consumer behaviour changes and short-term budget pressures could result in longer-term developments on the back of protracted COVID-19 concerns as consumers might have less need for mobility despite improved new vehicle affordability,” he said.

National Automobile Dealer Association (NADA) chairman Mark Dommisse said the good news is that the industry has started on its long road to recovery with fairly consistent sales results over the past five months, which is bringing a measure of stability to the market.

However, Dommisse said NADA also knows that the pandemic has altered the way many people travel and anticipate ongoing changes in the commute between home and work into the future.

“This will impact on the type of vehicles they buy or whether a significant number will switch to shared transport options,” he said.

Dommisse added that although the retail sales figures remained muted in November 2020, which once again reminded everyone of the challenges facing the overall automotive industry in these times, the general feeling of dealers is that they are slightly more hopeful than they were a few months ago.

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