February new vehicle sales remain slow

The impact of the COVID-19 lockdown on new vehicle sales is still strongly evident in the latest sales statistics.

Naamsa February 2021

Total domestic new vehicle sales declined by 13.3% to 37 521 units in February 2021 from the 43 296 vehicles sold in February 2020.

Mikel Mabasa, CEO of automotive business council Naamsa, said that in line with industry expectations, the new year got off to a slow start in terms of new vehicle sales considering that comparisons were still with the pre-Covid-19 first two months of 2020.

Mabasa said dealer sales represented an estimated 84.3% of the total reported industry sales of 37 521 vehicles, with the vehicle rental industry accounting for an estimated 10% of total sales, government 3.4% and industry corporate fleets 2.3%.

Sales of new passenger cars dropped by 18.1% to 24 270 units in February 2021 from the 29 622 new cars sold in February 2020. For a detailed analysis, click here.

Mabasa said the car rental industry accounted for “a sound” 14.4% of car sales in February 2021.

Sales of new light commercial vehicles, bakkies and mini-buses declined by 3.2% year-on-year to 11 246 units last month and medium commercial vehicles by 14.8% year-on-year to 560 units while sales of heavy trucks and buses increased by 3.1% year-on-year to 1 445 units.

Mabasa said the performance of the new vehicle market for the first two months of 2021, compared with the pre-COVID first two months of 2020, continues to reflect the economic and social challenges in South Africa considering that the country’s economy was already in a recession before the outbreak of the global health pandemic.

“Although a rebound in the new vehicle market is anticipated from March 2021 onwards, compared to the low-base affected COVID-19 corresponding months in 2020, it is likely that both business and consumer confidence will remain subdued over the balance of the year,” he said.

Mabasa added that Naamsa welcomes the tax relief measures for individuals announced in the February 2021 Budget, which will reduce the tax burden on largely the lower and middle-income households, and the adjustment in the corporate income tax rate, which was lowered to 27%.

“These measures, along with the current low interest rates, low inflation environment, as well as the roll-out of the vaccine in South Africa, will [provide] support to the new vehicle market over the short to medium term despite other above cost of living increases, such as the hefty rise in the price of electricity of over 15% this year,” he said.

Nedbank’s group economic unit said the gradual recovery in new vehicle sales continued in February 2021, resulting in a further moderation in the rate of decline over the year.

It said the year-on-year new vehicle sales figures for February 2021 are the last to be calculated off the pre-Covid base, which means the growth rates will look comparatively better from next month as the impact of the lockdown will be reflected in a much lower base.

WesBank recently forecast a 15.8% decline in new vehicle sales in 2021 "in normalised terms".

It said this in effect would represent a 12% growth compared to 2020 off the back of the lack of sales during the initial lockdown and the slow recovery for the remainder of last year.

Lebo Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance, said these figures will begin to make more sense from March 2021 but will equally present a skewed picture given the interrupted sales picture of last year.

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