Picture: REUTERS
Picture: REUTERS

New-vehicle sales more than doubled in June from May and were more than 5,000% better than April. But even the most determined good-news merchant will find it hard to deny that the local market is in a sorry state.

Halfway through the year and after three months of lockdown, aggregate car sales by the end of June were 34.8% behind those at the same stage in 2019 — 109,173 against 167,537. Throw in minibus taxis, bakkies, trucks and buses, and the total market deficit was 36.9% — 162,570 against 257,624.

No-one is sure what’s going to happen in the coming months. Marketers and analysts are predicting a full-year overall market decline of anywhere between 20% and 50%. What is clear, however, is the market is fighting back from its near-death experience in April, the fiercest Covid-19 lockdown month, when a mere 547 vehicles were sold.

In May, as the lockdown eased and motor dealerships started to reopen, the number grew to 12,932. In June, the first full sales month since February, this leapt to 31,867, including 19,624 cars. To put this in perspective, however, the June market was 30.7% weaker than in the corresponding month of 2019.

Still, even this was an improvement, after year-on-year deficits of 98.4% in April and 68% in May.

Low interest rates

Cyril Zhungu, head of automotive retail finance at Standard Bank, described June’s sales as “pleasing”, given the previous “virtual halt”. He said motor companies and their dealers responded well to strict health protocols limiting their operations.

It also helped that more government licensing centres, which enable buyers of new vehicles to complete registration and ownership formalities, had resumed operations in June. Many failed to open in May despite being allowed to do so, creating a severe sales logjam in parts of the country,

Zhungu, who believes the market will shrink 30% this year, said low interest rates are encouraging some vehicle buyers despite the economic recession and low business and consumer confidence.

However, WesBank marketing head Lebogang Gaoaketse said: “Market activity is expected to remain low for the remainder of the year as the uncertainties of the pandemic continue to bring pressure to bear, for consumers and business alike. Household budgets were already under pressure before the lockdown and within an economy that is now expected to shrink 7.2%, many potential buyers will delay their purchase decisions.”

Vehicle exports are also struggling to regain headway. In April, the industry shipped out 901 vehicles and in May, 11,901. In June, this grew further, to 13,595, which was 34.9% less than the 20,840 of June 2019. Midway through the year, aggregate exports of 108,933 were 34.8% behind 2019’s 182,361.    

Mike Mabasa, CEO of the National Association of Automobile Manufacturers of SA (Naamsa), said on Wednesday that the fate of exports is not in SA’s hands. Economic activity in the country’s export markets has declined drastically because of Covid-19 and “the recovery timeframe is difficult to predict”.

However, he added that with many countries beginning to ease lockdowns, “export numbers are anticipated to start gaining momentum again”.​

furlongerd@businesslive.co.za 

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