Colin-on-Cars – Not a good month

July has been a hellish month for business owners and consumers with the negative effects of the Level 4 Covid lockdown pummelled even further by the rampant lawless looting and attempted disruption of ports, railways and pipelines.

This, naturally, had a major impact on new vehicle sales and the momentum being gathered in South Africa’s new vehicle sales recovery was slapped into reverse.

“July brought the fragility of the motor industry back into stark focus,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Not only did the month bring physical impacts, but the resulting consequences in business and consumer confidence will continue to challenge the industry’s recovery for months to come. Once again, the industry’s resilience is being put to the test.”

Although July sales recorded a 1,7% growth year-on-year to 32 ,949 units according to naamsa | the Automotive Business Council, the month declined 13,6% compared to June sales. WesBank says the market experience was reflected in demand, with the bank’s application rate comparatively slower.

The passenger car segment grew 9,1% year-on-year to 20 575 units but that was a far cry from the 24 497 units sold in June. The real effects of consumer confidence can be seen in the dealer channel sales, down 1,1% year-on-year and significantly worse off (-15,8%) than June.

Light Commercial Vehicle (LCV) sales hurt even more, down 8,1% at 10 266 compared to 11 165 in July last year. Sales through the showroom floor also got dealt a 9,8% knock and the picture compared to last month’s sales, was significantly worse.

Toyota South Africa Motors (TSAM) managed to sell a total of 8 320 vehicles in what was undoubtably one of its hardest months since the country emerged from the Coronavirus-19-induced hard lockdown last year.

The civil unrest that engulfed KwaZulu-Natal and parts of Gauteng last month hampered business operations at the Prospecton Plant for about a week while operations at many dealerships had to be suspended. The situation also impacted the delivery of new vehicles as well as parts’ supply in the affected areas. Despite these challenges, Toyota was able to register a market share of 25% in July.

It was once again the Hilux as well as its reliable ally in the Light Commercial Vehicle (LCV) segment, Hiace, that led Toyota sales with 2 836 and 1 205 apiece.

Source: naamsa | the Automotive Business Council

WesBank remains optimistic, however, for the industry’s continued recovery.

“Rejuvenation of rental fleets, progress in the country’s vaccination rollout programme and revitalisation of the economy in general will all contribute towards building the South African motor industry,” says Gaoaketse. “The industry needs to remain focused on delivery and the inevitable demand that will rise in the medium term.”

 “While the country encountered yet another speed bump during July, there are many reasons to believe in the continued recovery of the market,” says Gaoaketse. “Low interest rates, the return of adjusted Level 3 lockdown regulations, and some improvement to civil stability will provide a good basis for the industry’s determination to once again shine through.”

“The month of July saw the South African economy being hit by the ‘perfect storm’ and the impact on the motor industry was huge,” commented Mark Dommisse, the Chairperson of the National Automobile Dealers’ Association (NADA), after studying the latest vehicle retail sales figures distributed by naamsa.

“The effect is not limited to July and will in all likelihood have an ongoing negative effect for several months to come. Dealers face stock shortages while local manufacturers battle to keep production going due to disruptions in the component supply chain caused by global semi-conductor shortages and the cyber-attack on the port operating systems, disruptions in KwaZulu-Natal and parts of Gauteng as well as the reimposition of Level 4 Lockdown.”

“Another blow for the industry at the end of the month, was the passing of Dr Johan van Zyl, Executive Chairman of Toyota SA Motors. It is fortunate that during his life he had the satisfaction of knowing the high esteem in which he was held by his colleagues and the broader industry. His inspiring leadership has created a company with an enviable reputation both in South Africa and abroad.

Reflecting on Toyota’s performance, Senior Vice President of Sales and Marketing at TSAM Leon Theron says: “Despite being pleased with our year-to-date sales, we remain committed to TSAM’s long-term strategic plans built around steady and sustainable growth. Over the next few months, we are hoping our sales will benefit from new and minor change model introductions – including the Land Cruiser 300.

On top of everything else, the monstrous hike in fuel prices – petrol up more than 20% since January – will do little to encourage consumers.

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