New-car sales improve in June but are still way down on 2019

New-vehicle sales in SA in June were markedly up from the previous two months as the entire motor industry resumed full operation, but the market remained under severe pressure.

Under relaxed Covid-19 lockdown restrictions, the 31,867 new cars, bakkies and trucks sold last month were substantially higher than the 12,932 units sold in May, but still 30.7% down from the 45,953 vehicles sold in June last year.

With the tourism sector still under lockdown restrictions, there was virtually no contribution by the car rental industry to support the market as is normally the case at this time of the year.

Compared to June 2019, passenger car sales dropped 33.4%  to 9,667 units, light commercial vehicles declined 29.7% to 10,189 units, and medium trucks dropped 26.6% to 611 units. Heavy trucks and buses bucked the trend by gaining 6.5% to 1,803 units compared to the same month last year.

Year-to-date, new passenger car sales are down 34.8%, light commercials have dropped 42.6%, medium trucks by 32.1% and heavy trucks by 28.3%.

Export sales, at 18,796 units, registered a fall of 11,871 units (38.7%) last month and are down a huge 40.3% year-to-date, a performance linked to the duration of the Covid-19 pandemic and its impact on the health of the global economy.

With export destinations starting to ease their lockdown restrictions, vehicle export numbers are anticipated to start gaining momentum again.

The outlook on domestic demand for new vehicles continues to remain under severe pressure, says the National Association of Automobile Manufacturers of SA (Naamsa).

“Middle class disposable income was already under huge strain before the national lockdown resulting from Covid-19, which has significantly worsened the already weak macroeconomic climate in the country,” it says.

“National Treasury now expects the local economy to shrink by 7.2% in 2020, its largest contraction in almost a century. Though the ABSA Purchasing Managers’ Index (PMI) shows that conditions continued to improve in the South African manufacturing sector, this should be seen in the context that most of the sector came to a near standstill during the nationwide Level 5 lockdown in April and only partially returned to normal production levels in May 2020.”

It will be a difficult year for an industry that contributes 6.4% to GDP, with a significant projected decline in the new vehicle market, that will test the renowned resilience of the industry, says Naamsa.

The association no longer lists sales of individual model ranges but Toyota was the best-selling brand in June with 8,442 local sales, ahead of Volkswagen (4,448), Hyundai (2,457), Ford (2,138), Isuzu (2,040), Nissan (2,010), Suzuki (1,433), Mercedes-Benz (1,410), Renault (1,152), Kia (941), BMW (850) and Mazda (821).