National Association of Automobile Manufacturers of South Africa (Naamsa) CEO Mikel Mabasa said the decline in total new vehicle sales last month, compared with the pre-COVID-19 first month of 2020, was in line with industry expectations.

Mabasa said although the current low interest rates, coupled with low inflation, could be regarded as building blocks to stimulate the new vehicle market, a full recovery to pre-COVID-19 new vehicle sales levels could take around three years.

“The 2020 new vehicle market recorded its lowest aggregate sales total in 18 years. The macroeconomic effects of COVID-19 will therefore continue to undermine business and consumer confidence and inhibit growth over the medium term,” he said.

Mabasa said trading conditions in the new vehicle market in the first quarter of 2021 are expected to remain challenging due to slow demand compared with the pre-COVID-19 first quarter in 2020, exchange rate volatility and the negative impact on household expenditure of fuel and electricity price increases.

However, Mabasa said considering the close correlation between new vehicle sales and the country's GDP growth rate, the Reserve Bank’s forecast of a domestic economic growth rate of 3.6% for 2021 "presents a favourable scenario for a sound rebound of the new vehicle market in 2021 from the exceptional low base in 2020”.

Naamsa reported that an estimated 28 716 units or 82.6% of the overall total reported industry sales of 34 784 vehicles represented dealer sales.

Download an infographic of the vehicle sales here

The vehicle rental industry accounted for an estimated 11.4% of overall sales, government 3.5% and industry corporate fleets 2.5%.

Sales of new passenger cars declined by 18.0% or 5 220 cars in January 2021 from the 29 073 new cars sold in January 2020.

The car rental industry accounted for 16.1% of car sales in January 2021.

Domestic sales of new light commercial vehicles, bakkies and mini-buses dropped by 4.9% year-on-year in January 2021 to 9 301 units while medium commercial vehicles at 497 units showed zero change and heavy truck and bus sales increased by 6.6% to 1 133 units.

Export sales of domestically produced vehicles grew for a second consecutive, increasing by 39.7% or 6 468 units in January 2021 to 22 771 units from the 16 303 vehicles exported in January 2020.

Mabasa said vehicle export numbers have been regaining momentum but a recovery will depend largely on an improvement in the economic climate of the South African automotive industry’s main trading partners.

“Vehicle exports are important to the viability of the domestic automotive industry as exporting remains key to generate sufficient economies of scale and to achieve improved international competitiveness,” he said.