New vehicle sales set off on a long and slow road to recovery
At 33,515, they rose marginally above July’s figure, which was itself a small improvement on June
The good news is that the new-vehicle market is growing, but the bad news is that it is happening so slowly that real growth is as far away as ever.
Sales of cars and commercial vehicles improved marginally in August. At 33,515, they were just ahead of July’s market which in turn was a bit better than June’s. However, compared with sales in August 2019, when the industry achieved a total of 42,960 vehicles, last month’s sales were 26.3% weaker.
For the year to date, the gap is even wider. Aggregate sales for the first eight months of 2020, at 228,190, were 34.6% % behind the 349,150 at the corresponding stage in 2019.
Last month’s number would have been even lower but for an unexpected spike in sales of medium and heavy trucks, which actually topped last year’s. But this was more than balanced out by a 32.6% drop in car sales, from 31,845 to 19,545.
This was to be expected. The National Association of Automobile Manufacturers of SA (Naamsa) reports that the car rental industry, worn down by paltry demand from local customers and the prospect of no foreign visitors for months to come, bought only eight vehicles in August. That was equivalent to 0.04% of the new-car market — a fraction of the sector’s 18% share in August 2019.
Mark Dommisse, chair of the National Automobile Dealers Association, does not expect market relief soon. He said on Tuesday: “Many of our potential buyers, be they businesses or members of the public, remain under huge financial pressure, while also facing the unknown in terms of future business and employment prospects. Relatively few are in a position to commit to vehicle repayments over increasingly longer periods.”
Naamsa CEO Mike Mabasa agreed, saying: “Activity is expected to remain low for the remainder of the year due to uncertainties relating to the economic impact of the coronavirus pandemic and as consumers and businesses continue to adapt to short-term budget pressures.”
Dommisse appealed to the Reserve Bank to keep interest rates low for at least two years to stimulate consumer demand. He said: “This could form one of the major building blocks for the government as it looks to stimulate the economy.”
Exports of South African-made vehicles also remain deep in arrears. Local motor companies shipped out 156,781 vehicles in the first eight months of 2020. That was 40% fewer than the 261,408 for the corresponding period of last year. August’s total of 23,337 was 46.9% weaker than the 43,690 of August 2019.
However, Mabasa said that with governments in some major export markets stimulating new-vehicle markets with financial incentives, the picture could start to improve soon.
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