COVID-19 drives vehicle sales down
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 affected by social distancing measures and working remotely from the middle of the month, and
a full lockdown from March 27, the month’s sales were only partially impacted in terms of selling days.
The real impact will be experienced during April, as the lockdown extends until at least April 16 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 in sales already experienced in March.
New vehicle sales were down 29,7 per cent, 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,” said Lebogang Gaoaketse, head of marketing and communication at WesBank.
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“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 per cent in February. By contrast, Italian sales in February were down 8,8 per cent ahead of their major lockdown.
The US was reporting sales to be down approximately 36 per cent 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 employment base.”
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Dealer channel sales were 28,9 per cent down in the passenger car segment, accounting for 18 308 units.
Government sales increased 14,7 per cent and rental sales had declined 31,8 per cent.
The Light Commercial Vehicle (LCV) segment was the biggest loser across the market, declining 37,1 per cent to 9 425 units.
The dealer channel shrank 39,3 per cent in the segment and rental sales, although small in volume (just 173 sales), were 62,5 per cent down.
The March impacts have resulted in a year-to-date market decline of 12,8 per cent 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,” reassured Gaoaketse.
“The industry is planning as much as it can amid 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.”
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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.
