Car assembly resumes but sales remain under lockdown

Under relaxed Covid-19 lockdown restrictions that took effect from May 1, the local motor industry this week started emerging from its weeks-long slumber with car factories reopening with half their staff.

However, dealers still didn’t know when they would be allowed to start selling vehicles.

As part of President Cyril Ramaphosa’s phased approach to lifting the lockdown, local car factories were allowed to start assembling components and vehicles again under the level 4 Risk Adjusted Strategy, but it’s taken government a lot longer to decide whether dealers are allowed to sell them.

Initially, it was announced that automotive dealers could only carry out emergency vehicle repairs under level 4, with vehicle sales only allowed again under level 3 and routine servicing under level 2.

After lobbying from the motor industry, the Department of Trade and Industry last week said that gradual opening of car sales would be allowed under specific conditions to be published, but as of Wednesday afternoon hadn’t yet announced what those conditions are.

It’s caused confusion, and some dealerships that tried to open their doors on Monday were reportedly shut down and their owners threatened with arrest.

Naamsa chairman Mike Mabasa said the organisation again met with government on Monday and submitted recommendations to allow the resumption of car sales, and had hoped for a decision by Wednesday. Naamsa represents 41 firms —  including BMW, Ford, Mercedes-Benz, Isuzu, Nissan, Toyota and Volkswagen — which build about 600,000 vehicles a year for the local and export markets.

In lobbying for vehicle sales to recommence, the motor industry has argued that it plays a critical role in getting people, products and services to market. An extended lockdown would affect about 1,600 franchise dealers in SA employing 60,000 people directly and nearly one million in the automotive value chain.

Extending the lockdown would increase the number of dealers that may never again open their doors, and lead to retrenchments at dealerships that do open. One of the latest automotive victims of the lockdown was Harley-Davidson Johannesburg, which was last week forced to close its doors permanently after 24 years in business.

The National Automobile Dealers’ Association (Nada) said that from a safety perspective, dealerships generally have low footfall and spacious facilities, ensuring effective social distancing. Appointment scheduling and access control measures, which were largely in place before the crisis, can ensure that the number of people within facilities at any given time is monitored and controlled, it said.

The five-week lockdown has had a devastating effect on the local automotive industry, bringing manufacturing and retail industry that accounts for almost 7% of SA’s GDP to a virtual standstill.

Public response to government’s handling of the pandemic, after being initially largely positive, is progressively turning to frustration at what are sometimes seen as illogical and autocratic decisions by ministers as they balance health risks of Covid-19 against restarting a battered economy.

The strict lockdown has threatened the viability of many automotive businesses, including components suppliers and dealers, which could lead to significant job losses. Toyota SA Motors CEO Andrew Kirby last month warned that components supply may be re-sourced to other countries if the motor industry doesn’t reopen for business soon.

He said export orders for SA-built Toyotas to Europe and Africa are expected to plummet around 15-20% in 2020.

New-vehicle sales in SA ground to a virtual standstill in April due to the Covid-19 hard lockdown, which forced the stoppage of all motor manufacturing and sales.

The industry total of 574 cars, bakkies and trucks recorded sold last month represented a 98.4% decline compared to April 2019.

The previous month, with the country hit by physical distancing from the middle of the month and lockdown from March 27, new-vehicle sales dropped 29.7% to 33,545 units compared to March 2019.

That leaves year-to-date new-car sales down 28.1% compared to 2019, with light-commercial vehicles (bakkies and minibuses) plummeting 38.5%, medium trucks and buses reduced by 27.3% and heavy trucks by 29.9%.