Why car sales should be allowed in Level 4

The financial well-being of a whopping 65% of vehicle-buying consumers in South Africa has been negatively impacted by the nationwide lockdown.

Many (30% to be precise) are under pressure to replace their vehicle within the next four weeks. This is compelling evidence in favour of allowing all vehicle dealerships – both independent and franchised – to trade under Level 4 of lockdown restrictions.

This is according to George Mienie, CEO of AutoTrader, who points out that, as consumers lose their jobs and/or receive salary cuts, they are demonstrating an urgent need to free up cash or reduce monthly household costs.

“Searches for second-hand vehicles under R50 000 have increased by almost 300% versus normal pre-lockdown levels,” he says.”Clearly, South Africans are worried about how they will feed their families.”

As the country’s largest motoring marketplace, car searches and sales via AutoTrader is considered an accurate barometer of consumer buying patterns and, as Mienie explains, motorists (including higher income level consumers) are trading down in all categories.

Online search feedback indicates that motorists are looking to trade down in an effort to make ends meet during these uncertain times. Picture: iStock

Anecdotal feedback from dealers indicates motorists are trading down from a BMW X5 xDrive 50d (R730 000) to a BMW 520d (R500 000), from a Mercedes-Benz ML63 (R670 000) to a Mercedes-Benz C180 (R300 000) and from a Ford Ranger (R335 000) to a Nissan NP200 (R160 000).

The website also conducted a survey during the first week of May 2020 in order to establish specific lockdown buying patterns.

“We have established that 30% of consumers indicate that they are under pressure to replace their vehicle within the next four weeks. This pipeline needs to be managed to avoid a further financial impact on both consumers and car dealers. The sooner consumers are allowed to trade with vehicle dealerships, the sooner their family’s financial pressures may be eased,” Mienie says.

He adds that consumers expected dealerships to be open and trading on Monday 4 May, as evidenced in the sharp increase in website traffic that day.

“Enquiries to vehicle dealerships have increased by more than 150% compared to pre-lockdown levels,” he notes.

Online searches for pre-owned cars under R50 000 have increased by almost 300% compared to normal pre-lockdown levels. Picture: iStock

Mienie says that it is therefore in the best interests of the South African consumer that all vehicle dealerships be allowed to trade under Level 4 and that “specific directions” be communicated by government as a matter of urgency so that dealerships are allowed to open their doors.

“It’s vital for the government to include independent dealerships since they dwarf franchised car dealerships in number in South Africa. These (the independent) outlets mostly fall into the small to medium enterprise category, which is arguably the sector currently most at risk.

”Furthermore, used car sales outnumber new car sales in South Africa by a factor of two to one,” he points out.
Mienie notes that all the supporting infrastructure needs to operate too.

“For the proper functioning of the supply chain for vehicle sales, licence departments, testing stations and roadworthy centres should open alongside vehicle dealerships in order to facilitate the transfer of ownership from dealerships to the buyer during Level 4,” he notes.

Assuming that careful controls and common sense prevail, Mienie says that allowing all vehicle dealerships to trade under Level 4 of lockdown restrictions would not endanger motorists.

“We need to step up and help consumers sell their vehicles. If protocols at dealerships are implemented in a controlled fashion, the risk of infection is low compared to shopping centres,” he concludes.

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