JOHANNESBURG – As the country observed the first-year anniversary since lockdown commenced, new vehicle sales provided reason for the industry to celebrate.
Twelve months ago, the country reeled to news of the pending lockdown as showrooms prepared to close their doors, consumers headed home, and vehicles were only let out for essential services.
In March 2020, the new vehicle market plummeted 29.7% compared to March 2019 to record just 33 545 sales.
The grip on the South African motor industry had tightened quickly.
One year later, the resilient industry is fighting a hard recovery.
But March 2021 sales put one of their best feet forward.
According to Naamsa, the Automotive Business Council, March sales recorded 44 217 new vehicle sales.
Compared to March last year, this represents a 31.8% increase in sales year-on-year, although the downtrodden March 2020 performance should be critically considered.
“Reassuringly, March sales show a 18.4% increase over February this year, a number more indicative of the real strength of the market,” says Lebogang Gaoaketse, head of marketing and communication at WesBank Vehicle and Asset Finance.
“With many of the brands indicating difficulty securing sufficient stock to meet demand, the new vehicle market seems to be well on its way to recovery.”
Passenger car sales were up 23.4% to 27 330 units year-on-year and 13.2% up on February 2021.
With some renewed activity in the rental market, the consumer demand was noticeable with dealer sales in the segment up 24.2%.
Light Commercial Vehicles (LCVs) delivered a staggering 52.4% improvement over March last year to sell 14 375 units.
This performance means the LCV segment is up 13.2% year-to-date and hopefully represents a surge in business confidence.
The majority of activity in the segment remained on the showroom floor with dealers selling 61.1% more bakkies than they did a year ago.
“With interest rates remaining stable at their low levels, a constantly – albeit slowly – improving supply of imported vehicles, and a slightly healthier economy operating within eased levels of restrictions, we expect the market to continue recovering well,” says Gaoaketse.
“While we have seen a significant increase in the average deal size financed by WesBank, we don’t expect new vehicle prices to increase dramatically.
“This will also provide added stimulus to the market and is a positive sign of consumer sentiment and ability to participate in the new vehicle market.”
The strong March performance made an encouraging impact on year-to-date sales.
First quarter sales are just 0.9% down on the same period last year with 116 225 sales recorded during the first three months.
VIEW FROM THE NATIONAL AUTOMOBILE DEALERS’ ASSOCIATION
“Stronger retail sales in the South African vehicle market in March are most encouraging, and this year may be better than expected for the local motor industry,” commented Mark Dommisse, chairperson of the National Automobile Dealers’ Association (Nada).
“It is evident that the delayed replacement cycle is starting to catch up, helped by interest rates remaining low.
“The used vehicle market is also strong, which is good for the overall health of all sectors of the industry.
“Two months after a semi-hard lockdown, consumer confidence is improving.
“Potential buyers were wary in January, cautious in February and, now that the second wave has passed, and the country’s economy is stabilising, people are looking to buy new vehicles again.
“The rate at which the commercial vehicle market is growing is also good news, as this signifies improvements in the general economy with the promise of an increasing number of infrastructure projects.
“This project pipeline will certainly boost the all-important commercial sector of the market,” added Dommisse.
“We cannot accurately compare sales in March 2021 with those in the same month last year.
“In March 2020 sales were heavily impacted by trepidation about impending restrictions and the level 5 hard lockdown which was announced on March 26.”
Sales reported by Naamsa last month totalled 44 217 units, which reflected a substantial 31.8% increase over March 2020.
An estimated 85% of the total represented retail sales through dealer channels.
The rental industry, which is belatedly re-fleeting after cutting back drastically on fleets in 2020, took up 8.7%. Rental sales accounted for 12.3% of the passenger segment in March.
Government took 3.7% of total sales and corporate fleets accounted for the remaining 2.6%.
At 27 330 units the passenger car market was up 23.4% on sales in March last year.
Domestic sales of commercial vehicles are also increasing, with light commercial vehicles improving by a substantial 52.4%, medium truck sales by 11.6% and heavy trucks and buses up 35.2% compared to the corresponding month last year.
“Looking ahead we believe there will continue to be a shortage of certain new models, with an ongoing global shortage of semi-conductors, or computer chips.
“Hefty increases in fuel prices coming next week, will be another factor on vehicle sales going forward as this puts more strain on household budgets,” added Dommisse.
“Much will depend on the effect of the Covid-19 pandemic which is still negatively impacting many of the countries that supply built-up vehicles and components to South Africa,” concluded the Nada chairperson.