Reduced level of car sales anticipated
"Trading conditions from May last year until February this year were reasonably consistent and representative of normal trading conditions before the country entered alter level 5 lockdown during March."
A reduced level of activity was anticipated in the car sales industry for the remainder of the year, asset financier WesBank said.
“While we were reassured by the levels of demand from consumers and business judged by volumes of applications for finance during May, we shouldn’t expect sales to return to any form of normality for the remainder of the year,” WesBank’s marketing and communication head Lebogang Gaoaketse said.
This as he acknowledged the industry was dealt a blow when the country entered into level 5 of the national lockdown in March.
“Trading conditions from May last year until February this year were reasonably consistent and representative of normal trading conditions before the country entered alter level 5 lockdown during March,” Gaoaketse said, adding the industry’s ability to reopen last month was impacted by ‘practical considerations of supporting administration as well as the actual appetite to conclude a deal in this environment’.
However, he said it was not reflective of sales reported by the National Association of Automobile Manufacturers of SA (Naamsa).
According to Naamsa statistics, a total of 12 932 new vehicles sales were recorded in May when the industry re-opened.
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The figure, however, was a 68% decrease from May 2019 and approximately only 30% of the market activity of the first two months of the year.
“Industry will be reassured by these initial levels of demand but buying behaviours will inevitably be changing.”
“WesBank data indicated an increase in demand for used cars in terms of vehicle applications, supported by larger than usual increase in the deal size of those used in car finance agreements,” he said, attributing this to buyers wanting to reduce the size of their car repayments and mobility budgets.
Meanwhile, Naamsa also recorded a 65,4% decrease in new passenger car market sales with the 9 019 vehicles which were sold.
Light commercial vehicles also recorded a sharp decrease of 74,8% during 2019 to only 3 019 units sold during last month.
Despite the overall decrease in demand for vehicles, Gaoaketse said the industry hoped demand would increase ‘as dealers fight for survival’.
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“These May volumes are reassuring given the slow resumption of activity during the month from such an unprecedented circumstance.”
“With a full month of sales ahead and more freedom within alert level 3 regulations, we will begin to understand what the new normal of activity will be in the new vehicle market,” he said.
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