New vehicle sales down 98,4 percent in April

With dealerships closed, businesses forced to work remotely and endure their own commercial challenges, and consumers stuck at home, traffic was at all-time low, never mind sales.

While little real insight can be drawn from April new vehicle sales, the market recorded a volume total of 574 units, down 98,4 per cent according to the National Association of Automobile Manufacturers of South Africa (Naamsa).

Read: COVID-19 drives vehicle sales down

Of that, 105 units were passenger cars and 318 were light commercial vehicles, impacting the year-to-date volumes of those segments downwards to 28,1 per cent and 38,5 per cent respectively. The industry total is 32,1 per cent down year-to-date.

The motor industry has been significantly impacted over the past two months. It will have learned and adapted just as the rest of the world has, and as this pandemic continues, there is nothing to define what the right or wrong way is to deal with it. But it will be eager to return to operation, whether manufacturing or retail.

“While government’s risk-adjusted and phased approach to unlocking economic activity is broadly supported, the motor industry will be looking to start operations sooner rather than later,” says Gaoaketse.

“The industry’s significant 6,9 per cent contribution to GDP means that many jobs are potentially impacted, across manufacturing and retail, as is foreign currency revenue from exports. Mobility plays a vital role in providing the necessary stimulus to all sectors of the economy to literally get moving.”

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Manufacturers will, however, be looking for renewed consumer demand before returning to full production capacity.
Numerous factors exist to stimulate the slow resumption of activity.

“The extremely low interest rate environment, thanks to a 2 per cent cut over the past month, will help stimulate general economic activity, not least vehicle sales,” says Gaoaketse.

“Indebted consumers will also be gaining some relief as a result. Significantly lower fuel prices will also contribute to household budgets, which – in some cases – will also be benefiting from work-from-home opportunities.”

Gaoaketse does not expect any form of normality to return soon. “There are simply too many unknowns, from both a pandemic and economic perspective,” says Gaoaketse.

“We should expect consumers to be slow in their return to the car market as they adapt to social distancing measures and remain cautious about their own budgets, given the uncertainty.”