The South African motor industry continues to adapt and evolve in the wake of COVID-19, displaying a high level of resilience. As the world reels from various levels of a second-wave lockdown, manufacturers and dealers have worked hard locally to meet an apparently changing demand from South African consumers.
According to the National Association of Automobile Manufacturers of South Africa (Naamsa), 38,752 new vehicles were sold during October. This represents the fourth consecutive month of sales growth by volume since reducing levels of lockdown, albeit that it is 25,4% lower than October last year.
“Combined with low interest rates, banks’ lending appetites have supported this market growth. What is intriguing, however, is that levels of sales and levels of demand experienced at WesBank seemingly don’t correlate,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance. “Market activity as measured by finance applications indicate a demand for vehicle finance at levels only marginally lower than October last year.”
This demand is also not unduly different year-on-year in terms of demand for finance for either new or used vehicles.
Although market volume increased by 1,516 units over September, sales were relatively worse off in October year-on-year. September sales were down 23,9% by comparison. Segment performance faired more evenly, however.
Passenger car sales were 25,4% down on October 2019 to 26,793 units, a relatively better performance than in September. Light Commercial Vehicle (LCV) sales were worse off, down 27,8% to 9,644 units compared to October 2019, and a September performance that was only down 8,2%.
That performance was a little more skewed in favour of passenger car dealers when looking at the dealer channel. Retailers of passenger cars will have welcomed the consumer demand lifting their market performance to a 7.3% decrease year-on-year. However, LCV sales tumbled 30,7% in the same channel during October.
The October sales results pushed the market through the 300,000-vehicle milestone to 303,997 units year-to-date. Soberingly, this is almost 150,000 units less than the same period last year or 32,5% down.
“We expect interest rates to remain low for quite some time as Government continues to make every attempt to stimulate the economy,” says Gaoaketse. “This continues to provide a good opportunity to purchase a vehicle at some of the most affordable lending rates.”
However, WesBank warned that demand in the new vehicle market may be waning off the back of COVID-19 as consumers simply have less need for mobility, never mind the affordability implications.
“With fuel sales down between 20% and 25% and public transport demand around 30% lower, consumers are simply moving around less,” says Gaoaketse. He went on to say that the mobility element of household budgets may be shifting more towards property investment as the housing market picks up, thanks to low interest rates and the rising need to work from home.