Some momentum in new vehicle sales

The recovery in the new vehicle market is gaining momentum, says Naamsa.

Absa Naamsa June 2021

The automotive business council says the recovery is in line with industry expectations despite the country moving from COVID-19 Level 2 lockdown restrictions to Level 3 in mid-June and subsequently to an adjusted alert Level 4 at the end of June 2021.

It was commenting on the release of the latest new vehicle sales data, which showed that total domestic sales increased last month by 20.2% to 38 030 vehicles from the 31 643 units sold in June 2020.

Of the total reported industry sales, an estimated 86.3% or 32 847 vehicle units represented dealer sales, 7.6% sales to the vehicle rental industry, 3.9% to industry corporate fleets and 2.2% sales to government.

Naamsa CEO Mikel Mabasa said the new vehicle market continued its gradual recovery during the month of June 2021 in the face of a number of challenges but also opportunities. Mabasa said ongoing stronger sales through the dealer channel signal improved consumer and business sentiment; rental companies are re-fleeting again and the delayed replacement cycle, owing to lockdown restrictions in 2020, are contributing to improved new vehicle sales.

However, Mabasa said the persistent electricity supply disruptions, port delays and the third COVID-19 wave of infections being experienced are of concern.

“The vaccine roll-out is slow, and a third wave of the pandemic threatens to dent the momentum in consumption in the country, especially if the adjusted alert Level 4 lockdown restrictions are extended for longer than the initial two-week period,” he said.

Sales of new passenger cars increased year-on-year by 28.0% last month from the 19 134 units sold in June 2020, with the car rental industry accounting for 10.5% of car sales in June 2021.

Sales of new light commercial vehicles, bakkies and mini-buses increased year-on-year by 9.6% to 11 208 units and medium commercial vehicles by 19.1% to 687 units while heavy bus and truck sales declined by 3.3% to 1 653 units.

New vehicle sales for the first six months of 2021 are now 40.1% higher than in the corresponding period in 2020. However, sales in the first half of this year are still 11.7% lower than in the corresponding pre-COVID-19 period in 2019.

Mabasa said this highlights that a full recovery will be protracted until around 2023.

Nedbank’s group economic unit said the artificial situation created by the pandemic makes it challenging to draw meaningful inferences from the year-on-year sales numbers.

“Although the annual numbers reflect a recovery compared to pre-pandemic levels, it is clear that the sector will take time to recover fully.

“Encouragingly, the rebound in global economic activity has supported export volumes, and this segment will continue to benefit from favourable conditions abroad.

“Locally, however, renewed lockdown restrictions, a slow vaccine roll-out, and unreliable electricity supply will hamper the pace of recovery in domestic sales,” it said.

Exports of locally produced vehicles grew by 50.9% to 28 384 units in June from the 18 808 vehicles exported in June 2020. You can download the Absa Vehicle and Asset Finance report here: AVAF Infographic NAAMSA June2021

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