The COVID-19 hard lockdown restrictions in the second quarter of last year continue to distort new vehicle sales, with total sales increasing by 197.8% to 38 337 units last month from the 12 874 vehicles sold in May 2020.
Mikel Mabasa, CEO of automotive business council Naamsa, said vehicle production and retail sales only started to ease back into operation in May 2020 under lockdown Level 4 following the temporary shutdown of the domestic automotive industry in April 2020 under level 5 of the country’s lockdown restrictions, so the year-on-year comparison remains distorted.
Total new vehicles sales in May 2021 are 5.4% or 2 169 units lower than the 40 506 vehicles sold in May 2019.
However, Mabasa said the new vehicle market is in gradual recovery mode in line with the anticipated GDP growth rate in excess of 3% projected for the domestic economy in 2021.
Mabasa added that year-to-date aggregate new vehicle sales are now 44.9% higher than in the same five-month period last year.
Naamsa said an estimated 33 642 units or 87.8% of the total reported industry sales in May 2021 represented dealer sales, with an estimated 8.2% representing sales to the vehicle rental industry, 2.0% to industry corporate fleets and 2.0% sales to government.
Total reported new vehicle sales in May 2021 were 7.1% higher than the 35 779 vehicles sold in April 2021 but 11.7% lower than the 43 428 units sold in March 2021.
However, total reported sales in May 2021 were 2.1% higher than the 37 521 units sold in February 2021 and 10.2% more than the 34 784 vehicles sold in January 2021.
New passenger car sales increased by 169.0% in May 2021 to 24 122 units from the 8 966 new cars sold in May 2020 - and were 4.3% higher than the 22 911 new cars sold in April 2021.
The car rental industry accounted for 11.4% of new car sales in May 2021.
Sales of new light commercial vehicles, bakkies and mini-buses increased year-on-year by 288.5% to 11 930 units in May 2021 while medium commercial vehicle sales rose year-on-year by 84.5% to 559 units and heavy truck and bus sales by 223.2% to 1 726 units.
Mabasa said the Naamsa CEO’s Confidence Index, an in-house leading business confidence indicator of current and future developments in the domestic automotive industry, reflected the general agreement by the Naamsa CEO that business conditions for the automotive industry over the next six months would continue to improve.
Nedbank’s Group Economic Unit said the year-on-year figures were heavily exaggerated by the exceptionally low base created by last year’s stricter lockdown, which made it difficult to assess underlying demand conditions and draw meaning from the year-on-year numbers.
To overcome this obstacle, Nedbank compared this year’s sales with the average sales recorded in May 2017 to May 2019.
Nedbank said total vehicle sales were still 8.2% below the 2017-2019 average and, by the same comparison, total passenger vehicles sales were 8.4% lower and commercial vehicle sales were down by 7.9%
“Although there will be a gradual rebound in sales, the pace of recovery will be highly dependent on vaccine roll-outs and how the pandemic is contained both domestically and abroad,” it said..
WesBank head of marketing and communication, Lebogang Gaoaketse, said the market continues its slow recovery in the face of a number of challenges and opportunities.
“Interest rates remain at historical lows, providing some of the most affordable finance and consequently opportunities to purchase new vehicles.
“However, price inflation against the backdrop of a subdued economy continued to be a barrier for many purchase decisions,” 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.
You can download a summary of the month's sales here: AVAF Infographic NAAMSA May2021
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