Motorists impacted by lockdown are desperate for dealerships to open
The financial well-being of 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 four lockdown restrictions.
This is according to George Mienie, CEO of AutoTrader, who said as consumers lose their jobs and/or receive salary cuts, they are demonstrating an urgent need to free cash or reduce monthly household costs.
“Searches for secondhand vehicles under R50,000 have increased by almost 300% versus normal pre-lockdown levels,” he revealed.
“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 have long been regarded as an accurate barometer of consumer buying patterns.
Mienie said motorists (including higher income level consumers) are trading down in all categories.
Anecdotal feedback from dealers trading on AutoTrader reveals that motorists are trading down from a BMW X5 50D (R730,000) to a BMW 520d (R500,000). They are trading down 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 ran a survey during the first week of May 2020 to establish specific lockdown buying patterns.
Mienie said: “We have established that 30% of consumers indicate 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."
He said consumers expected dealerships to be open and trading on May 4, as evidenced in the sharp increase in website traffic on that day.
“Enquiries to vehicle dealerships have increased by more than 150% compared to pre-lockdown levels,” he saod
Mienie said 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 2:1."
Mienie said all the supporting infrastructure also needs to operate.
“For the proper functioning of the supply chain for vehicle sales, licence departments, testing stations and roadworthy centres should open alongside vehicle dealerships to facilitate the transfer of ownership from dealerships to the buyer during level 4.".
Assuming that careful controls and common sense prevail, Mienie said 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."