The motoring industry’s gradual recovery in new vehicle sales continues

The new vehicle sales statistics for the month of January shows that the motor industry’s gradual monthly recovery is continuing but figures are still lagging behind when compared to pre-COVID-19 times, which is in line with industry expectations.

Aggregate domestic sales accounted for 38 784 units, which represented a decline of 13.9% [5 629 units] compared to the 40 413 vehicles sold in January 2020, according to The National Association of Automobile Manufacturers of South Africa (Naamsa).

“Export sales recorded a second consecutive month of solid growth in January 2021 and at 22 771 units reflected an increase of 6 468 units, or 39,7%, compared to the 16 303 vehicles exported in January 2020,” said the association in a statement.

Overall, out of the total reported industry sales of 34 784 vehicles, an estimated 28 716 units, or 82,6%, represented dealer sales, an estimated 11,4% represented sales to the vehicle rental industry, 3,5% sales to government, and 2,5% to industry corporate fleets.

The January 2021 new passenger car market at 23 853 units had registered a decline of 5 220 cars, or a fall of 18,0%, compared to the 29 073 new cars sold in January last year. The car rental industry accounted for a sound 16,1% of car sales in January 2021.

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 9 301 units during January 2021 had recorded a modest decline of 479 units, or a fall of 4,9%, from the 9 780 light commercial vehicles sold during the corresponding month last year.

Sales for medium and heavy truck segments of the industry reflected a positive performance and at 497 units and 1 133 units, respectively, showed zero change in the case of medium commercial vehicles, and, in the case of heavy trucks and buses an increase of 70 vehicles, or a gain of 6,6%, compared to the corresponding month last year.

The January 2021 the exports sales number at 22 771 units represented a noteworthy increase of 6 468 vehicles or 39,7% compared to the 16 303 vehicles exported in January 2020. The current upward momentum in vehicle exports bodes well for a much-improved performance this year compared to 2020.

For the first quarter of 2021 trading conditions in the new vehicle market are expected to remain challenging due to slow demand compared with the pre-COVID-19 first quarter comparison, exchange rate volatility and the negative impact on household expenditure by fuel and electricity price increases. However, considering the close correlation between new-vehicle sales and the country’s GDP growth rate, the Reserve Bank’s forecast of a domestic economic growth rate of 3,6% for 2021 presents a favourable scenario for a sound rebound of the new vehicle market in 2021, from the exceptional low base in 2020. It should be noted that the 2020 new vehicle market recorded its lowest aggregate sales total in 18 years.

The macroeconomic effects of COVID-19 will, therefore, continue to undermine business and consumer confidence and inhibit growth over the medium term. Although the current low interest rates, coupled with low inflation, could be regarded as building blocks to stimulate the new vehicle market, a full recovery to pre-COVID-19 new vehicle sales levels could take around three years.

Vehicle export numbers have been regaining momentum but in terms of a recovery much will depend on an improvement in the economic climate of the South African automotive industry’s main trading partners. Vehicle exports are important to the viability of the domestic automotive industry as exporting remains key to generate sufficient economies of scale and to achieve improved international competitiveness.

Picture: Pixabay