Colin-on-Cars - Auto market showing growth

Strikes and load shedding took a toll on new vehicle sales last month but the market still managed to grow by 6,1% compared to October last year, according to figures released by  naamsa | The Automotive Business Council.

Aggregate domestic new vehicle sales in October 2021, at 41 035 units, reflected an increase of 2 341 units, or 6,1%, from the 38 694 vehicles sold in October last year. Export sales recorded a decline of 10 159 units, or 30,0%, to 23 685 units last month compared to the 33 844 vehicles exported in October 2020. 

Overall, out of the total reported industry sales of 41,035 vehicles, an estimated 33 842 units, or 82,5%, represented dealer sales, an estimated 14,0% represented sales to the vehicle rental industry, 2,1% sales to government, and 1,4% to industry corporate fleets. 

The October 2021 new passenger car market at 27,496 units registered an increase of 815 cars, or a gain of 3,1%, compared to the 26 681 new cars sold in October 2020. The car rental industry supported the new passenger car market during the month and accounted for a sound 18,2% of car sales in October 2021.

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 11,188 units during October 2021recorded an increase of 1 535 units, or a gain of 15,9%, from the 9 653 light commercial vehicles sold during October 2020.  

Sales for medium and heavy truck segments of the industry reflected a mixed performance and at 576 units and 1 775 units, respectively, showed a decline of 97 units, or 14,4% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses an increase of 88 vehicles, or a gain of 5,2%, compared to the corresponding month last year. 

The sigh of relief with the country’s move to adjusted alert level 1 from October 2021 was short-lived due to the adverse events that occurred during the month, including the three-week strike in the steel and engineering sector as well as businesses having to endure several days of rolling blackouts during the month ahead of the local government elections.

In addition to COVID-19 supply chain disruptions resulting in vessel and container shortages consequently resulting in higher logistics costs, load shedding remained an area of great concern impacting on the ability of the industry to plan and grow. On the positive side, respondents to the Absa Purchasing Managers’ Index remained upbeat about an improvement in business conditions over the next six months. 

“The new vehicle market appears to be recovering strongly, demand out-stripping current supply constraints,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “The second half of the year has performed strongly since the mid-year lockdown restrictions, with the market trading above 40m000 units a month for the past three months.”

WesBank’s own data indicates a resurgence in the South African motor industry. 

“While we have seen high demand for pre-owned vehicles over the last two years, a slow shift back towards new vehicles may be currently underway,” says Gaoaketse. “Compared to a year ago, WesBank’s new applications rose 1,8% during October, while applications for pre-owned deals declined 5,9%. In addition, the bank’s used-to-new ratio has shifted over the 12-month period from 2,25 used vehicles financed for every new vehicle a year ago, to 2,08.”

However, the issue of supply is a global factor that skews the overall market picture. 

“Until global manufacturing stabilises off the back of the pandemic and resolves its micro-chip shortages, consumer and business purchase decisions will be swayed by availability and necessity,” says Gaoaketse. “The good news is that South African car dealers are in a much more sustainable position than a year ago.”

naamsa also confirmed that Neale Hill who was recently appointed President of Ford Motor Company Africa, from October 01 this year was elected unopposed as the new naamsa President for a two year term.

“naamsa is increasingly playing an indispensable transformative role that contributes directly to the sustainable development of the country’s productive economy.

“I am very pleased to lead our country’s automotive industry in this capacity as we accelerate our role as a major industrial and economic force that adds real value every day, by providing mobility; facilitating trade; creating sustainable jobs; moving people, goods and services; and by serving communities and creating prosperity for the people of South Africa”, says Hill.

https://bit.ly/3w9qjbM

 Some recovery in vehicle market

Cautious optimism seems the most apt description of the South African vehicle market that made gains during June only to have lockdown restrictions raised up a level – seriously impacting a wide range of business buyers. 

Reflecting on the new vehicle sales statistics for the month of June 2021, The Automotive Business Council ( naamsa) said the recovery in the new vehicle market is gaining momentum and in line with industry expectations, notwithstanding the country moving from level 2 to level 3 in mid-June and subsequently to adjusted alert level 4 lockdown restrictions at the end of June 2021. 

Aggregate domestic sales in June 2021, at 38 030 units, reflected an increase of 6 387 units, or 20,2%, from the 31 643 vehicles sold in June 2020. Export sales also recorded a gain of 9 567 units, or 50,9%, to 28 384 units in June 2021 compared to the 18 808 vehicles exported in June 2020. 

Overall, out of the total reported industry sales of 38 030 vehicles, an estimated 32 847 units, or 86,3%, represented dealer sales, an estimated 7,6% represented sales to the vehicle rental industry, 3,9% to industry corporate fleets, and 2,2% sales to government. 

“The fact 86,3% of the 38 030 new vehicles sold in South Africa in June went through the retail dealer channels is a strong indicator of growing confidence in buying capital assets by both the business and consumer sectors of the market,” says Mark Dommisse, Chairperson of the National Automobil Dealers’ Association (NADA). 

Toyota South Africa Motors (TSAM) marked the end of the second quarter with a total of 56 460 vehicles sold in South Africa since January. Spearheading the company’s retail roll of honour is the Hilux with 19 818 units sold, year to date. For the month of June, Hilux amassed a total of 3 320 sales. The Hilux made a remarkable contribution to TSAM’s total sales of 9 630, with an overall market share of 25% for the month of June. 

Overall, the June 2021 new passenger car market at 24 482 units registered an increase of 5 348 cars, or a gain of 28,0%, compared to the 19,134 new cars sold in June 2020. The car rental industry accounted for 10,5% of car sales in June 2021. 

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 11 208 units recorded an increase of 986 units, or a gain of 9,6%, from the 10 222 light commercial vehicles sold during June 2020. 

Sales for medium and heavy truck segments of the industry reflected a mixed performance and, at 687 units and 1 653 units, respectively, showed an increase of 110 units, or 19,1% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses a decline of 57 vehicles, or a fall of 3,3%, compared to the corresponding month last year. 

“Ongoing stronger sales through the dealer channel signals improved consumer and business sentiment, rental companies are re-fleeting again while the delayed replacement cycle, due to lockdown restrictions in 2020, are catching up in contributing to improved new vehicle sales,” says naamsa. 

“However, of concern is the persistent electricity supply disruptions, port delays, and the third Covid-19 wave of infections being experienced. The vaccine rollout is slow and a third wave of the pandemic threatens to dent the momentum in consumption in the country, especially if the adjusted alert level 4 lockdown restrictions are extended for longer than the initial two-week period.” 

Compared to the first six months of 2020, the new vehicle market was now 40,1% above the corresponding period last year, but compared to the pre-Covid-19 first six months 2019, the new vehicle market was still 11,7% below the corresponding period 2019, highlighting that a full recovery would be protracted until around 2023. 

Vehicle exports continued their upward momentum during the month and according to the ABSA Purchasing Managers’ Index (PMI), the outlook for manufacturers targeting the European and US export markets remains very bright, with recent international PMI readings remaining at or near record-high levels. In terms of a timeframe for a full recovery to pre-COVID-19 vehicle record export levels, much will depend on the ongoing path and management of the global pandemic. 

“What we really need as a stimulus is a rapid increase in the rate of vaccinations. The injection of R10-billion into Aspen to facilitate vaccine production is good news in the fight against the Coronavirus,” says Domisse. 

“While the majority of sales during June were not severely impacted by COVID-19 restrictions, we should expect a returned level of hesitancy during July,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Both business and consumer confidence are certainly building their own momentum despite the current environment, which is providing continued energy into the slow recovery of the market.”