Vehicle sales "better than expected""

New vehicle sales trends showed an encouraging improvement last month (September) despite still declining overall by 23.9 percent to 37 403 units from the 49 140 vehicles sold in September 2019.

Naamsa vehicle sales September 2020

National Automobile Dealer Association (Nada) chairman Mark Dommisse said new vehicle sales in September increased by more than 4 000 vehicles from the 33 259 vehicles sold in August this year, which is “very encouraging and better than expected”.

However, Dommisse doubted total industry sales for this year will get to 400 000 units compared to the about 535 000 vehicles sold in 2019. Of the total industry sales last month, 88.4% represented dealer sales.

But Dommisse said this is a “funny number” because a higher percentage is not necessarily indicative of an improved dealer sales environment. Dommisse explained that rental and government sales historically account for about 15% of total sales and if these sales are lower, the dealer sales percentage of the total rises.

National Association of Automobile Manufacturers of South Africa (Naamsa) CEO Mike Mabasa said domestic vehicle sales continue to improve in line with the lower lockdown levels over recent months. Sales of new passenger cars declined by 31.2% to 22 798 units last month from the 33 120 units sold in September last year but were 18% higher than the 19 335 new cars sold in September last year.

However, Econometrix chief economist Azar Jammine said that September tends to be a very strong month seasonally and therefore preferred to look at the changes in year-on-year growth rates.

“The [passenger car] industry has gone from an average -34.4% for the first nine months of this year to -33.3% in August and -31.2% in September. There has been an improvement but it’s actually quite modest so one shouldn’t get too excited about it,” he said.

But Dommisse said the 10% month-on-month jump in car sales from to 30 000 in August to 33 000 in very similar trading condition months is encouraging.

“I believe the interest rate intervention by the Reserve Bank has helped a lot,” he said.

Jammine said the other segments of the new vehicle market have recovered more strongly than the car market, which is reflected in the lower year-on-year decline in these segments. Sales of new light commercial vehicles, bakkies and mini-buses declined last month by 8.9% year-on-year to 12 267 units, medium commercial vehicles by 13.9% to 680 units and heavy trucks by 5.8% to 1 658 units.

Jammine said the higher negative growth in the passenger car market is understandable given that this segment is much more dependent on household consumers, who are under tremendous stress.

“Many have lost their jobs and will be much more cautious about spending money whereas the business sector probably does have reserves to spend on commercial vehicles,” he said.

Jammine said the lower passenger vehicle sales to the car rental industry was also a major reason for the sharper decline than other segments. He said the underlying growth in the passenger vehicle market is about -15% to -20% rather than -31% because about 20% of monthly sales last year needed to be deducted.

However, Jammine is skeptical about car rental companies buying new vehicles again in a hurry, particularly in light of the new restrictions imposed this week on international travellers.

“I still see car sales being down 30% year-on-year this year compared to last year and commercial vehicle sales being down by -15% to -20%,” he said.

Download an overview of the Naamsa sales figures here: AVAF Infographic NAAMSA Sep2020

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