South African vehicle sales surge in June, but still way down year-on-year

Toyota enjoyed a dominant sales lead in June as customers started tricking back into its showrooms. File picture: Toyota SA.

Toyota enjoyed a dominant sales lead in June as customers started tricking back into its showrooms. File picture: Toyota SA.

Published Jul 2, 2020

Share

Johannesburg - There is good news and bad news concerning South Africa’s new vehicle sales in June 2020. 

June was the first month that the entire motor industry was able to resume full operation following the lockdown restrictions imposed in the previous months, and as a result the total sales volume last month grew by 146 percent versus the month before, from 12 932 to 31 867 units.

While this is certainly a step in the right direction, it’s worth noting that June 2020 sales were still 30 percent down on the same month last year. Passenger cars fell by 33.4 percent year-on-year, while light commercial sales were down by 29.7 percent. As one would expect, the rental car industry has been hit hard by the lockdown restrictions, which is why just 0.4 percent of the cars sold in June went to rental firms. Interestingly, 4.6 percent of vehicle sales were to government fleets, while the corporate world scooped up just 3.7 percent.

Sadly we cannot report on the individual model sales as Naamsa has elected not to release these figures, however, it did provide a summary of the top performing manufacturers in June.

Toyota led the race with 8193 units, followed by Volkswagen at 4383 and Hyundai at 2422.

They were followed by Ford (2135), Isuzu (1705), Nissan (2010), Suzuki (1433) and Renault (1152).

“The outlook on domestic demand for new vehicle continues to remain under severe pressure,” Naamsa said in response to June’s vehicle sales number.

“Middle class disposable income was already under huge strain prior to the national lockdown resulting from Covid-19, which has significantly exacerbated the already weak macro-economic climate in the country.”

National Treasury expects the South African economy to shrink by 7.2 percent in 2020, which is its largest contraction in almost a century. 

“2020 will be a difficult year for the industry with a significant projected decline in the new vehicle market and will be testing the renowned resilience of the industry,” Naamsa added.

New trends emerge

On the upside, WesBank said its application data for the month shows high levels of demand for cars, comparable to levels experienced late last year, however there were a number of changes in behaviour that could be the beginning of new trends as buyers adapt to short-term budget pressures, the bank’s marketing head Lebogang Gaoaketse explained.

Most notable of these was the uptake of fixed rate deals, WesBank added, which is an opportunity provided by the historically low interest rates. 

The financial institute also noted that its average deal size had increased substantially in recent times.

“Increases in deal size between 10 and 15 percent across new and used vehicles compared to June last year either indicates a stronger appetite or demand for quality stock based on price inflation, or an increase in the portion of debt in every deal,” Gaoaketse added.

However, it is widely believed that many consumers will delay their purchase decisions until there is more certainly surrounding the Covid-19 pandemic and its economic implications.

IOL Motoring

Related Topics: