NADA chairperson Mark Dommisse said new vehicle sales in South Africa were continuing to outpace forecasts as the industry recovers from the dire situation it experienced a year ago.

This is in reference to the hard COVID-19 lockdown restrictions, which significantly depressed new vehicle sales in 2020, particularly in the months of April and May.

Dommisse said a year ago dealers resumed limited retail sales in May under lockdown Level 4 but currently the market is improving significantly while the industry awaits the possible negative effects that could flow from a third wave of COVID-19 infections.

“The lockdown has had a devastating effect on the rental industry, which has resulted in a lack of year-old cars coming onto the used vehicle stands at dealerships. That is putting upward pressure on used car pricing. This, in turn, is impacting on sales volumes of pre-owned models,” he said.

The latest TransUnion Vehicle Pricing Index (VPI) released earlier this month revealed that new vehicle prices rose by 8.8% in the first quarter of 2021, almost three times the current inflation rate, compared to the first quarter of 2020. The used vehicle VPI rose to 3.7% from 1.4% a year ago.

New vehicle sales statistics released on Tuesday showed that the COVID-19 hard lockdown restrictions last year continue to distort year-on-year new vehicle sales comparisons, with total sales increasing by 197.8% to 38 337 units last month from the 12 874 vehicles sold in May 2020.

Year-to-date aggregate new vehicle sales are now 44.9% higher than in the same five-month period last year.

Sales of new passenger cars increased year-on-year by 169.0% in May 2021 to 24 122 units, new light commercial vehicles, bakkies and mini-buses by 288.5% to 11 930 units, medium commercial vehicle sales by 84.5% to 559 units and heavy truck and bus sales by 223.2% to 1 726 units.

“This is very heartening, particularly the fact that dealer sales represented 87.8% of the total reported new vehicles sales of 38 337 units in May,” said Dommisse.

“Strong sales through the retail dealer channel means there is an improvement in consumer confidence, which is good news 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 with Naamsa [the automotive business council] now forecasting year-on-year growth for 2021,” he said.

Dommisse said it is also encouraging to see that rental companies were re-fleeting again, and in May 2021 these companies bought 8.2% of total vehicles and 11.4% of the passenger car volume.

He added that NADA members were experiencing limited new vehicle availability in certain segments, largely because of the global microchip shortage that is taking longer to overcome than was originally presumed.

“Although the strength of the local new vehicle market lies with the lower priced model ranges, as well as the SUV and Crossover segments, there was also strong buying sentiment at the more premium SUV end of the scale being retailed in May.

“It is also invigorating to see the introduction of, and the appetite South African car buyers have for new model ranges, specifically in the Compact SUV segment, such as the Toyota Urban Cruiser, Toyota Starlet, Suzuki Vitara Brezza, and the ongoing stream of new models from Hyundai and Kia.

“Notable as well is the Peugeot 2008 and the Haval Jolion, with Nissan set to join the fray with its Magnite crossover,” he said.

Dommisse added that there were also significant sales in all the commercial vehicle segments while exports, the lifeblood of the local vehicle manufacturers, also rebounded strongly.