Colin-on-Cars – Small recovery but vehicle sales still down

The expected upturn in car sales following the drop to Level 2 of lockdown did not quite happen and August sales figures show a 26,3% decline in the total market compared to last year.

New vehicle sales figures for August, distributed by the National Association of Automobile Manufacturers of SA (NAAMSA), show a market that remains fairly stagnantalthough there was a slight increase in sales through the dealer channel of 1 003 new vehicles in August, compared to July 2020, but sales of passenger cars through dealers still declined 15,9% year-on-year, compared to a fall of 18,7% in July, while sales of light commercial vehicles were 21,1% lower than August last year against a decrease of 17,1% in July.

New vehicle sales through the dealer channel in August amounted to 30 875 units, which made up 92% of the total market of 33 815 units. A major reason for this high percentage is that sales to rental fleet, which have long been a positive factor for the total market, have virtually disappeared as the rental business has decreased substantially.

Dealer sales on a year-to-date basis, after eight months of 2020, underline the tough market conditions with dealer sales down 32,5% from 288 600 units in 2019 to 194 892 this year. A ray of light came in the medium and heavy commercial vehicle segments, which all showed some growth in August. However, a factor here is the opening of more licencing departments across the country under Level Two, as well as movement being allowed between provinces.

“We do not anticipate we will see any marked recovery any time soon. This is probably our new normal for a while,” says Mark Dommisse, Chairperson of the National Automobile Dealers’ Association (NADA).

“Many of our potential buyers, be they businesses or members of the public, remain under massive financial pressure while also facing the unknown in terms of future business and employment prospects. Relatively few are in a position to commit to vehicle repayments over increasingly longer periods.

“We trust that the SA Reserve Bank keeps interest rates low for an extended period of a least two years to enable markets to recover. This could form one of the major building blocks for the government as they look to stimulate the economy. Inflation remains low, but there are noticeable increases in household expenses and fuel costs, all of which will have an inflationary impact in the short to medium term.

“As an industry, we realise that the difficult times will continue, and we must plan around the changed economic scenario. Motor traders in South Africa have been a resilient group when facing setbacks in the past and we remain optimistic in the longer term,” concluded Dommisse.

Toyota South Africa Motors (TSAM) reported sales of 7 743 vehicles in August 2020, an increase of 279 units compared to the previous month of July. It was again the Toyota Hilux that spearheaded the company’s local sales with an enviable total of 3 610 units sold. The Double Cab configuration with 1 850 sales remains top of mind for customers, while Single and Extra Cab versions accounted for 1 071 and 689 of the total Hilux sales, respectively.

However, Senior Vice President of Sales and Marketing at TSAM, Leon Theron, says the company’s marketing strategy is not just limited to new vehicle sales leadership. In fact, he commended local Toyota, Hino and Lexus dealerships for servicing a total of 107 636 vehicles and selling no less than 1 182-million vehicle parts locally while a further 275 000 pieces were shipped outside of our borders.

“So, rather than just focusing on sales every month, we are also interested in how we further cement trust in the Toyota, Lexus and Hino brands, because by doing that we will build a sustainable business where sales volumes can largely take care of themselves.”

“While the sales figures overall show this is by no means an immediate sign of recovery for the market, it is certainly a good sign of some stimulus,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank.

The volume shift in the market came from rejuvenation in Government spend rather than consumer or business demand.

WesBank continued to experience an uptake on fixed rate deals thanks to the low interest rate environment.

“A year ago, nearly two thirds of WesBank finance agreements were concluded on linked interest rates. During August, this split had shifted towards a more balanced picture of fixed and linked-rate deals,” says Gaoaketse.

“With interest rates at their lowest levels ever, fixing the rate on new finance agreements is a good way to save money over the duration of the contract. While consumers shouldn’t expect to necessarily conclude a finance deal at the current prime rate on a fixed-rate agreement, it remains a good opportunity to access some of the most affordable debt South Africans will experience for some time.”

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