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[1]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 [PMI] 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.

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