File picture: Justin Sullivan / Getty Images via AFP.
File picture: Justin Sullivan / Getty Images via AFP.

2021 SA vehicle sales get off to a slow start, but growth is anticipated

By Motoring Staff Time of article published Feb 1, 2021

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JOHANNESBURG - There’s no denying that 2020 was a gloomy year for the motor industry, just as it was for the rest of the economy as the strict Covid-19 related lockdowns both here and abroad took their toll.

South African vehicle sales plunged by 29.1 percent versus 2019, and this certainly wasn’t off a high base given that the local market has been shrinking since 2013, albeit at a much smaller annual rate.

Although the first month of 2021 did not get off to the best start, with an overall year-on-year decline of 13.9 percent, the National Automobile Association of South Africa (NAAMSA) said that this was in line with industry expectations.

For the record, it was passenger cars that registered the biggest decline, falling by 18.0 percent versus last January, while the bakkie and LCV picture was a bit more encouraging, with this sector seeing a decline of just 4.9 percent.

Better times ahead, say industry leaders

Although the market is not expected to return to pre-Covid levels anywhere in the near future, it is encouraging that industry leaders are predicting a vehicle sales increase of between 15 and 21 percent for this year.

Speaking at the annual State of the Motor Industry event recently, Toyota South Africa Motors President and CEO Andrew Kirby forecast, albeit with a measure of caution, that the local vehicle market would grow by 21 percent this year, to a total of around 460 000 units. Of these, around 285 200 units would be conventional passenger cars, 151 800 would be bakkies and LCVs and the remaining 23 000 would comprise medium and heavy commercial vehicles.

NAAMSA was a bit more conservative with its 2021 prediction, however, and the industry body expects sales to increase by around 15 percent in total. However, it also expects export volumes to improve by around 20 percent, which would facilitate an 18 percent rise in local vehicle production.

The association also expects the rental car market to recover markedly in 2021 as tourist markets open up again.

“The new vehicle market is expected to still face severe challenges of slow demand, rand exchange rate volatility and negative business and consumer sentiment during the first quarter of 2021,” Naamsa said.

“Although the current low interest rates, coupled with low inflation, could be regarded as a building block to stimulate the economy, a vehicle remains a big-ticket purchase consideration for any household budget and is consequently a key indication of market confidence. The focus for the industry now needs to shift to resilience, recovery, and creating strategies to deal with new business and consumer behaviour.”

However, Toyota SA CFO Bronwyn Kilpatrick warns South Africans not to expect too quick a recovery.

“We have all heard the negative sentiments surrounding our economy and the many challenges that it faces as it looks towards its recovery path. The key fundamentals of the economy are not well placed due to the structural constraints which exist; coupled with the growing debt of the country and the potential electricity capacity constraints business may be faced with in the future do not bode well for a quick recovery,” Kilpatrick said.

“With the pandemic comes job losses, salary cuts and much uncertainty and this all impacts consumer confidence. This will of course influence the recovery of the economy and in our case the size of the domestic automotive market.

“However, our experience from 2020 has shown us that not all industries are impacted in the same way and that opportunity still exists – we just need to find it.”

Further to that, Andrew Kirby pointed out that the last time South Africa’s vehicle sales dipped below the 400 000 mark was in 2009, when the country was in recession amid the global financial crisis.

“Just like Covid-19, the Great Recession of 2008 had spurred an economic meltdown that caused business closures, high unemployment, stagnating commerce as well as great uncertainty.

“While we believe that some lessons learned from the Great Recession can provide some direction to recovery, we also realise that the path may take a very different turn and that the timespan may even be longer,” Kirby concluded.

IOL Motoring

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