The National Association of Automobile Manufacturers of South Africa (Naamsa) has put forth the figures for March’s new vehicle sales and it is the first time we have tangible figures indicating the impact of the Corona Virus on the South African economy. What is even more frightening is the fact that South Africa only saw a majority of employees working remotely from the middle of the month and the lockdown only taking effect from 27 March and the impact this has already made. The month of April is expected to be much worse as the public will remain in lockdown until at least 16 April and dealerships will remain closed until then also.
March 2020 has experienced a massive decrease in new vehicle sales, 29.7 per cent less when compared with the same month in 2019. This is a trend experienced all over the world as the Chinese car market dropped 80 per cent in February 2020 and the US by 36 per cent by mid-March.
“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. 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.” says Lebogang Gaoaketse, Head of Marketing and Communication, WesBank.
“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,” continued Gaoaketse
The local market had sold 14 150 fewer units than in March last year and 9 727 units less than in February 2020. Although government sales had increased by 14.7 per cent, sales from the rental industry had declined by 31.8 per cent. The largest loss of units is recorded within the Light Commercial Vehicle (LCV) segment as it saw a decline by 37.1 per cent resulting in only 9 425 units sold. Just the impact from March has resulted in 12.8 per cent decline in a year-to-date comparison with 2019, this means that for 2020 only 117 230 units were sold whereas this time last year 134 456 would have been sold already.
“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. 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. The March market performance is expected. 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,” added Gaoaketse.
“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,” concluded Gaoaketse.
