New car sales slowly resume in SA

Vehicles start trickling out of showrooms as motor industry begins to ease out of lockdown

01 June 2020 - 17:14 By Denis Droppa
A BMW dealer in Johannesburg with new cars ready for sale.
A BMW dealer in Johannesburg with new cars ready for sale.
Image: supplied

New vehicles started to trickle out of showrooms in May after the motor industry was allowed to start building and selling cars under relaxed lockdown conditions.

With about half a month of selling time after dealers were allowed to open their doors under strict trading risk-adjusted measures, there were 27,496 cars, bakkies and trucks sold last month.

This was 68% lower than May 2019, but a noteworthy improvement from the April 2020 performance. New-vehicle sales in SA ground almost to a halt in April due to the Covid-19 hard lockdown, which forced the stoppage of all motor manufacturing and sales.

Vehicle export sales, at 10,819 units, also registered a big fall of 19,333 units (64.1%) compared to May last year - but an improvement on April 2020, considering that some of the vehicle manufacturers only commence full production this month.

In last month’s vehicle sales, 11,289 units (87.3%) represented dealer sales, 7.9% to government, 2.9% to industry corporate fleets, and 1.9% to the vehicle rental industry.

The performance of vehicle exports over the course of 2020 remains linked to the duration of the Covid-19 pandemic and its impact on the global economy, says the National Association of Automobile Manufacturers of SA (Naamsa).

“With all the OEMs gearing up for full production from June 1 onwards and with the domestic automotive industry’s major export destinations starting to ease their lockdown restrictions, vehicle export numbers are anticipated to start gaining momentum again,” it said.

Under phased conditions beginning on May 13, dealers were allowed to reopen with a maximum 30% staff complement, the majority of car sales were done remotely via the internet or e-commerce or telephone, and test drives were conducted by appointment only.

Under phase 2 (from May 25 to June 6), all dealerships and used car outlets are operating with up to 60% of employment; limited customers are allowed to enter the dealership under very strict hygiene and social distancing conditions, in line with the regulations; and remote vehicle sales continue for those potential customers with access to online services.

Under phase 3 (from June 8 until alert level 3 is lifted), all dealerships and used car outlets may operate with up to 100% of employment. On-site customer contact will be allowed but kept to a minimum, whilst remote vehicle sales are encouraged. Test drives can be arranged on site by appointment only and under very strict hygiene conditions, including fully sanitised cars.

“New vehicle sales for May 2020 continue to reflect persistent demand weakness due to the impact of the Covid-19 pandemic as consumer and business sentiment remain severely depressed. The motor industry is currently experiencing unchartered conditions given the current unpredictability in these uncertain times,” said the association.

“New-vehicle sales are generally linked to the strength of the economy. The anticipated extent of the negative annualised GDP growth in the country therefore does not bode well for the industry over the medium term.

“The impact of Covid-19 on the new-vehicle market and when the level of factory output will return to where it was before the lockdown will only become clearer once the entire motor industry becomes fully operational and prepares itself for the ‘new normal’.”

Volkswagen was the top-selling brand last month with 2,749 units locally, ahead of Toyota (1,848), Hyundai (1,368), Ford (811), Mercedes-Benz (795) and Isuzu (723).

Following usual trends, the country’s top-selling model was the Toyota Hilux (796 units) ahead of the VW Polo (668) and Polo Vivo (636).