Strike affects new vehicle market

The new vehicle market and vehicle exports were negatively impacted in October 2021 by the three-week strike in the steel and engineering sector and the return of an acute load-shedding programme, according to automotive business council, Naamsa.

Naamsa October

Total domestic new-vehicle sales rose by 6.1% to 41 035 units last month from the 38 694 vehicles sold in October last year.

Nedbank’s group economic unit says this represented a slowdown in the growth in annual total sales from 15.9% in September 2021.

Of the total reported industry sales of 41 035 vehicles, an estimated 82.5% or 33 842 units represented dealer sales, 14.0% sales to the vehicle rental industry, 2.1% sales to government and 1.4% sales to industry corporate fleets.

Exports of domestically produced vehicles declined by 30% or 10 159 units to 23 685 vehicles last month from the 33 844 vehicles exported in October 2020.

Naamsa says the sigh of relief as the country’s moved to adjusted alert Level 1 from October 1, 2021 was short-lived owing to the adverse events that occurred during the month.

It says these adverse incidents included the three-week strike in the steel and engineering sector and businesses having to endure several days of rolling blackouts during the month ahead of the local government elections.

“In addition to COVID-19 supply chain disruptions resulting in vessel and container shortages, which consequently resulted in higher logistics costs, load-shedding remained an area of great concern impacting on the ability of the industry to plan and grow,” it says.

Sales of new passenger cars increased by 3.1% to 27 496 units last month from the 26 681 new cars sold in October 2020.

The car rental industry supported the new passenger car market during the month and accounted for 18.2% of car sales in the month.

New light commercial vehicles, bakkies and mini-buses sales increased by 15.9% to 11 188 units last month from the 9 653 units sold during October 2020, while sales of medium commercial vehicles declined by 14.4% to 576 units and heavy truck and bus sales rose by 5.2% to 1 775 units.

Nedbank says new-vehicle sales are still well below pre-pandemic levels and down 20.5% on the three-year pre-COVID-19 average sales for October in 2017 to 2019 and 21% lower than October 2019 levels.

It says the weakness was broad based, with all classes of vehicles below trend.

Nedbank added that passenger and light commercial vehicle sales, which together made up roughly 94% of total vehicle sales, remain respectively 22.4% and 18% lower than the three-year pre-COVID average.

“Still, the year-to-date sales are 27.2% higher than in the same period a year ago but are a staggering 14.2% weaker than over the same period in 2019,” it says.

Looking ahead, Naamsa says respondents to the Absa Purchasing Managers’ Index (PMI) remained upbeat about an improvement in business conditions over the next six months, and the domestic automotive industry will continue to benefit from the strong rebound in global economic activity and the favourable conditions abroad.

Naamsa says the four-month downward trajectory in vehicle exports could be linked to the impact on production of the three-week strike in the steel and engineering sector, and new-model introductions normally take time to ramp up to full production.

Download a short report on the month's sales here.

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