New-car sales down 29.1% due to Covid-19
Despite a 3% interest rate cut, hard-hit consumers aren't flocking to dealerships
The crippling effects of the Covid-19 pandemic saw new-vehicle sales in SA plummet 29.1% to 380,449 units in 2020, from 536,612 sales in 2019.
In a heavy blow to an industry that contributes 6.4% to GDP, it was a drop back to the levels of two decades ago, says the National Association of Automobile Manufacturers of SA (Naamsa).
Much of the damage was done during the hard lockdown when vehicle factories and dealerships were shut down from March 27 to May 13, but sales haven’t recovered to previous levels since the automotive market reopened.
Vehicle sales increased every month between July and November, showing signs of resurgent consumer demand. But despite a 3% interest rate cut during the year to a near 50-year low, monthly new-vehicle sales since dealers reopened were below 2019's levels.
In December 2020, overall new-vehicle sales were 37,493 units, which was a 10.1% decline on the same month in 2019. It was a mixed result however, with new cars declining 14.4% but light commercials increasing 3.2%. Sales of heavy commercial vehicles and buses remained weak in December, declining year-on-year by 15.6%.
SA entered a recession before the outbreak of Covid-19, says Naamsa, which means middle class disposable income was already under pressure before the national lockdown.
“The vehicle rental industry, which is a major seasonal contributor to the new vehicle market, also effectively remained dormant due to the lockdown restrictions on business travel and tourism for most of the year,” said Naamsa chair Mikel Mabasa.
The passenger car and light commercial vehicle markets continue to be characterised by a buying down trend, with many buyers moving to pre-owned vehicles. The premium car segment had continued to experience significant pressure in 2020.
Vehicle exports in 2020 declined to 271,819 vehicles - a 29.8% drop from the 387,092 vehicles exported in 2019, resulting from the fall in global vehicle demand because of the pandemic.
Naamsa says tough months are still ahead before business and consumer confidence will rebuild, but predicts an improvement of about 15% in domestic new-vehicle sales and a 20% improvement in vehicle exports for 2021.