New-vehicle sales ‘reach a plateau for the year’
New-vehicle sales rose slightly in July, reaching a plateau where analysts think they will settle for the rest of the year.
Having seen the market rise in huge bounds from 546 during April’s lockdown to 31,642 in June, the motor industry had hoped for one more swell before it evened out.
Instead, a market of 32,396 cars and commercial vehicles outsold June by just 754. Mike Mabasa, CEO of the National Association of Automobile Manufacturers of SA (Naamsa), said on Monday: “The figures provide a picture of what could be expected for the remainder of the year.”
Cyril Zhungu, head of automotive retail finance at Standard Bank, said: “This is about the level I expect to see maintained in coming months.”
Despite the modest month-on-month improvement, he said: “Considering the state of the economy and the fact that some industries are still effectively closed, any improvement is to be welcomed.”
Among those industries are tourism and business travel. Under normal circumstances, vehicle rental companies, which service these sectors, account for more than 10% of vehicle sales in some months. In July, the share was 0.4%.
Total new-vehicle sales in July were 29.6% weaker than the 46,042 of June 2019. Car sales alone, at 18,905, were 35.8% below last year’s 29,457. As a result, for the first seven months of 2020, aggregate car sales, at 127,944, lagged 2019’s 196,994 by 35.1%. Include commercial vehicles, and the market was down 35.9% — from 303,666 to 194,741.
The good news, said Zhungu, is that demand for vehicles remains strong. Much of that demand, though, is moving into the used-vehicle market. In good times, new vehicles outsell used ones. At the moment, says a report by the TransUnion research company, 2.3 used cars are being sold for every new one.
There is also a change in used vehicles being bought, with a strong shift towards older, cheaper models.
New-vehicle exports surged in July, rising to 24,706 from June’s 13,595. But the figure was still 29.6% behind the 35,087 of a year earlier. For the seven months to July, aggregate exports totalled 133,648 — 38.5% behind 2019’s 217,448.
However, Mabasa says he is optimistic that “exports will gain upward momentum during the second half of the year as international markets ease their lockdown restrictions”.
He added: “Many are also stimulating their new-vehicle markets with financial incentives.”
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