DAVID FURLONGER: Buy now, die later

Sales of Rolls-Royce and Bentley cars set new records in 2021 as the world’s super-rich, reminded by Covid of their own mortality, decided to splash out on luxury goods while they were still alive to enjoy them.

For us mere mortals in SA, however, the harsh economic realities of living with a pandemic – never mind a mismanaged economy – continue to limit our car-buying potential.

Rolls-Royce sold 5,586 cars around the world last year, a 49% increase from 2020. Bentley sales rose 31%, to 14,659. The two UK brands are owned respectively by BMW and Volkswagen.

Rolls-Royce CEO Torsten Müller-Ötvös said this week that his company’s sales, the best in its 117-years history, were helped by the realisation that “life can be short and you’d better live now rather than postpone until a later date”.

Some had lost friends and acquaintances to Covid. This had encouraged them to invest in “the nice, lovely things in the world”.

Figures released this week by Naamsa/the Automotive Business Council revealed that SA new-vehicle sales also improved in 2021 – though at nowhere near the same rate. And while Rolls-Royce and Bentley both boast full global order books for this year, SA’s continued growth will be much more modest.

Following 22.1% growth in 2021, Naamsa CEO Mikel Mabasa predicts a further 8% improvement this year.

Sales of cars and commercial vehicles last year totalled 464,122, up from 380,206 in 2020. Pre-pandemic, in 2019, the market was 536,612. At their peak, in 2013, sales were just shy of 650,000. It’s anyone’s guess how long it will take to get back there, even though medium-term automotive policy relies on it being surpassed fairly quickly.

For now, we should be grateful that last year’s recovery exceeded expectations. Most 2021 growth forecasts were in the 12%-15% range, with only one, at 21%, coming close to the eventual number.

But let’s not get carried away, says Mabasa. There’s a long, hard road ahead. Unlike the super-rich, most of us have to watch every rand.

He says: “The domestic automotive industry is under no illusion that the pandemic will continue to have a significant impact on the economy and automotive industry in 2022. Many disruptive elements are expected to remain in play.”

Escalating cost increases and supply chain disruptions, such as the global shortage of semiconductors, will continue to hamper production. So will load-shedding. “Furthermore, the realities of rising interest rates and fuel prices are expected to impact vehicle affordability as household budgets remain under pressure, dimming the hopes of a further strong recovery in the economy any time soon.”

Last year’s 22.1% market growth was achieved despite a blip in December, when the market shrank 3.5% from 12 months earlier. For the year as a whole, however, sales of new cars grew 23.3%, light commercial vehicles 20%, medium commercials 11.6%, heavy trucks 21.9% and extra-heavies 24.2%. The only sector to sink deeper into despair was buses, where sales fell 8.8% to a sorry 664.

After several months of misery, new-vehicle exports recovered slightly in December, allowing full-year 2021 to record a small improvement over 2020. At last year’s halfway point, exports were over 60% ahead of 2020, before riots, strikes and cyberattacks on state transport operator Transnet slowed production of vehicles and automotive components. Product changes at two major exporters also had an impact.

From July to November, export numbers fell sharply from 2020 levels. In December, however, with production back to something approaching normal, exports of 21,430 vehicles were 19.4% better than the 17,943 of December 2020. As a result, aggregate exports for 2021 totalled 295,268 – 8.8% better than the 271,288 of 2020.

Mabasa says: “The performance of vehicle exports remains reliant on the performance and direction of global markets. Over the course of 2022 the domestic automotive industry’s vehicle exports are expected to benefit from favourable conditions abroad as well as several new model introductions by major vehicle exporters.”