APRIL NEW VEHICLE SALES NOT A SURPRISE

The National Association of Automobile Manufacturers of South Africa [NAAMSA] said that the April new vehicle sales figures were not a surprise and were expected. “The 98,4% drop in new vehicle sales is a true reflection of the South Africa economy at the back of a 35-day hard lockdown where economic activity was not possible because the country prudently elected to support the imperative to contain the COVID-19 virus and save lives”, said Michael Mabasa, NAAMSA CEO.

Vehicle and automotive component production, as the bedrock of the country’s manufacturing sector, will gradually ease back into production because vehicle production will resume under strict risk adjusted measures, hygiene and social distancing requirements stipulated in the regulations to ensure the safety of all employees, customers, suppliers and of everyone who access the sector.

New vehicle sales statistics for April 2020 reflects the expected decline of 98,4% [36 213 units] from the 36 787 vehicles sold in April last year to the aggregate domestic sales of 574 units in April 2020. Equally, export sales at 901 units also registered a huge fall of 31 928 units or a decline of 97,3% compared to the 32 829 vehicles exported in April last year. Overall, out of the total reported industry sales of 574 vehicles, an estimated 275 units or 47,9% represented dealer sales, 37,8% sales to government, an estimated 12,4% represented sales to the vehicle rental industry, and 1,9% to industry corporate fleets.

The April 2020 new passenger car market had registered a decline of 24 877 cars or a fall of 99,6% to 105 units compared to the 24 982 new cars sold in April last year. Domestic sales of new light commercial vehicles, bakkies and mini-buses at 318 units during April 2020 had recorded a significant decline of 9 494 units or a fall of 96,8% from the 9 812 light commercial vehicles sold during the corresponding month last year.

Sales for medium and heavy truck segments of the industry also performed poorly and at 64 units and 87 units, respectively, reflected a substantial decline of 515 vehicles or a fall of 88,9% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses a decline of 1 327 vehicles or a fall of 93,8 % compared to the corresponding month last year. The performance of vehicle exports over the course of 2020 remains linked to the duration of the COVID-19 pandemic and its impact on the global economy.

The April new vehicle sales and export figures represent a barometer of the COVID-19 impact on the automotive industry and the economy at large. Businesses and consumers are currently uncertain on what the future holds
through the lockdown restrictions, with unemployment rate increases, negative exchange rate impact, negative annualised GDP growth rate, and Moody’s and Fitch’s rating downgrade all putting pressure on disposable income and debt levels. The business activity index of the Absa Purchasing Managers’ Index [PMI] survey crashed to an all-time low of a mere 5.1 index points in April.

The decline means that manufacturing output came to a near standstill during the nationwide lockdown. The PMI survey reflects the immediate, devastating impact the lockdown had on manufacturing output and overall
demand. All of this translates into low business and consumer confidence, which will cause a delay in big purchases such as vehicles. While some easing of restrictions from May should aid a slow recovery in coming months, a lot of manufacturing capacity will remain idle for some time.

The industry is under no illusion that this is going to be a very difficult year ahead. However, the cut of the interest rate by a further 100 basis points during April 2020 will not only assist indebted consumers and businesses in the short term, but also help restarting industry sales once the country resumes business. The reduction in fuel prices will also contribute while the oil price remains low.

The performance of exports would remain a function of the performance and direction of global markets. The global automotive industry has been hit hard by the Coivd-19 pandemic with a significant fall in demand forecast for all the major automotive regions in 2020. The impact of the fall in global vehicle demand would become clearer in the domestic industry’s export sales over the short to medium term.

Click here to download the Flash OEM stats for April.