SA’s car market to shrink again in 2020, says WesBank
Johannesburg - The South African motor industry should brace for another tough year, WesBank CEO Chris de Kock has warned.
Speaking at the 2020 Cars.co.za Consumer Awards at Kyalami on Thursday evening, De Kock predicted that the new vehicle market would shrink by 3.5 percent this year, with the total volume amounting to around 518 000 units. He added that both business and consumer confidence were likely to remain subdued for the foreseeable future.
This outlook is shared by Toyota SA’s CEO Andrew Kirby, who predicted an annual volume of 515 000 vehicles for 2020 at the recent State of the Motor Industry event.
WesBank’s De Kock added that the biggest decline this year, in percentage terms, would take place in the light commercial vehicle market, which he expects to shrink by 4.7 percent. This would be due to the sluggish business side of the economy, which should also see medium and commercial vehicle sales dropping by 2.5 percent and 4.3 percent respectively.
Passenger car sales are certainly not immune either, with WesBank expecting a 2.9 percent decline versus 2019.
However, the tough economic times and all the associated rising costs are also leading consumers into more affordable vehicles.
“Affordability remains the number one factor influencing new car buying decisions in South African households,” WesBank said.
“Rand fluctuations, volatile fuel prices, the inevitable rise of electricity and other utility costs, a possible increase in VAT and rampant unemployment figures continue to haunt us. In the short term this will drive the trend of consumers buying down (opting for cheaper derivatives), and continue to create demand for used cars. In light of buyers’ sensitivity to expenses, people are also holding on to their vehicles for longer.
“WesBank’s average deal now runs for 45 months, up from the traditional three-year buying cycle that we have become accustomed to.”