New-car sales keep rising, but still down on 2019
Fourth consecutive month of improved sales are tempered by year-to-date decline of 32.5%
SA’s latest new-vehicle sales figures are a reason for celebration or despair, depending on whether you’re a cup-half-full or half-empty type.
New-vehicle sales in October were up for the fourth consecutive month since the easing of lockdown. According to Naamsa, market volume increased to 38,752 units last month, a 1,516 increase over September.
But sales were 25.4% lower than October 2019, and year-to-date industry sales are 32.5% down compared with 2019 — a decline of 146,261 units.
“New vehicle sales in SA are slowly picking up but not at 2019 levels yet. We are not out of the woods yet,” says Mikel Mabasa, Naamsa CEO.
“While vehicle exports are making a steady comeback, we remain … anxious about the reports of a Covid-19 second wave across Europe that could further depress our overall outlook for the balance of this year,” Mabasa said.
Passenger car sales hit 26,793 units in October (25.4% down on October last year), light commercial vehicles 3,717 units (27.8% down), medium trucks 662 units (21.2% down), and heavy trucks registered 215 units (a decline of 11.5%).
Major supply issues across significant light commercial vehicle (LCV) brands due to Covid-19 restrictions, coupled to the runout of certain key models, resulted in a 22.6% reduction in light commercial vehicle volumes on dealer floors.
“Demand seems to be outstripping certain supply lines on LCVs, and while this is not an ideal situation, it could be worse if things were the other way around,” said Mark Dommisse, chair of the National Automobile Dealers’ Association (Nada).
“Dealers are enjoying strong demand for used vehicles, however getting sufficient quality preowned stock is problematic. This situation has been worsened by the limited flow of decent stock coming from the rental companies, who destocked earlier in the year when demand for hire cars fell drastically, resulting in significant downsizing of these businesses.
“On the brighter side, there are several marketing incentive programmes running at local dealers as we head for the holiday season. With interest rates still low, it remains a good time for consumers to make purchases, [if] they can afford it,” said Dommisse.
Amid the gloom, Suzuki SA recorded a new sales record, which reflects a buying-down trend by consumers battered by the economic effects of the lockdown.
The company sold 2,032 new Suzukis last month, breaking through the 2,000-unit barrier for the first time and establishing the brand as a top-six player. The Swift was the brand’s best-seller with 731 units, while the recently launched S-Presso, which is SA’s cheapest car, recorded 426 sales.
Toyota sold the most new vehicles last month with 9,179 units, followed by Volkswagen (6,365), Ford (3,738), Hyundai (2,781), Nissan (2,569), and Suzuki (2,032).
“We expect interest rates to remain low for quite some time as the government continues to make every attempt to stimulate the economy,” says Lebogang Gaoaketse, head of marketing and communication at WesBank vehicle and asset finance.
“This continues to provide a good opportunity to purchase a vehicle at some of the most affordable lending rates.”
Gaoaketse warned that demand in the new-vehicle market may be waning due to Covid-19 as consumers have less need for mobility, never mind the affordability implications.
“With fuel sales down between 20% and 25% and public transport demand around 30% lower, consumers are moving around less,” he said.
The mobility element of household budgets may be shifting more towards property investment as the housing market picks up, thanks to low interest rates and the rising need to work from home, Gaoaketse said.
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