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March vehicle sales expectedly low

One of the first tangible signs of the impact COVID-19 has had on the South African economy hit hard when March’s new vehicle sales were announced by the National Association of Automobile Manufacturers of South Africa (Naamsa).

With the country impacted by social distancing measures and remote working from the middle of the month, and lockdown from 27 March, the month’s sales were only partially impacted in terms of selling days. The real impact will be experienced during April as lockdown extends until at least 16 April and a large number of dealer floors remain closed.

The emergence of the pandemic around the world will have impacted consumer sentiment earlier in the month, contributing to the significant fall off in sales already experienced in March. New vehicle sales were down 29.7% to 33,545.

“The market was looking to establish some form of stability judging from February’s performance, only to be undone by the COVID-19 global pandemic,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Looking at international markets already under lockdown, we can expect April to look even worse as consumers stay home and only essential services are delivered from dealer workshops.”

The Chinese car market dropped a staggering 80% in February. By contrast, Italian sales in February were down 8.8% ahead of their major lockdown. The US was reporting sales down approximately 36% by mid-March as the virus started taking its toll on a market that sells over 17 million new vehicles a year. That market is expected to lose up to 3.1 million new vehicle sales over the next five months.

“While we are in full support of government’s decisive leadership measures to combat the spread of COVID-19, there is no denying the impacts it will have on the economy and certainly the country’s motor industry,” said Gaoaketse. “With plant shutdowns already in place and dealers closed, the industry’s main concern will be the protection of jobs in this important employer base.”

Providing some perspective, Gaoaketse said the market had sold 14,150 fewer units than in March last year and 9,727 units less than last month. “These are major volumes removed from the market and the fear will be the uncertainty of when the recovery will happen as the virus timeline evolves,” he said.

Passenger cars lost 26.8% year-on-year to sell 22,200 units in March. “For the first time in a long time, the dealer channel performed worse than the overall market, showing the very tangible impact that footfall has on dealer business,” said Gaoaketse. Dealer channel sales were 28.9% down in the passenger car segment, accounting for 18,308 units. Government sales had increased 14.7% and rental sales had declined 31.8%.

The Light Commercial Vehicle (LCV) segment was the biggest loser across the market, declining 37.1% to 9,425 units. The dealer channel shrank 39.3% in the segment and rental sales – although small in volume (just 173 sales) – were 62.5% down.

The March impacts have resulted in a year-to-date market decline of 12.8% to 117,230 sales. This compares to a market volume of 134,456 units by this time last year.

“The March market performance is expected,” reassures Gaoaketse. “The Industry is planning as much as it can amidst the uncertainties presented to the world. South Africa will have further impacts from limited global production and the potential impacts on the supply of parts.”

There are also positive factors that present themselves to consumers during this difficult time, however. “Government’s drastic cut of the interest rate by 100 basis points will not only assist indebted consumers in the short-term, but will provide huge assistance to re-starting industry sales once the country resumes. Although cars are currently parked in garages and driveways, the reduction in fuel prices will also contribute. Household budgets unaffected by the current circumstances will now enjoy some savings from their mobility budgets without a daily commute,” said Gaoaketse.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.