File picture: Reuters.
File picture: Reuters.

The state of South Africa’s car market after one full month of sales

By Pritesh Ruthun Time of article published Jul 2, 2020

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Johannesburg - The new and used vehicle market has experienced its first full month of activity in June since South Africa was put into a nationwide lockdown on March 26.

Although vehicle sales didn’t hit pre-Covid-19 expectations (nor did they breach last year’s numbers for the same month) the sheer number of cars that found new homes last month should serve as a clear indicator that our appetite for hot wheels won’t be put on lockdown.

Sales are happening but the market is still under pressure

According to the National Association of Automobile Manufacturers of South Africa (Naamsa), new vehicle sales were 30.7% down when compared with June last year, a decline of 14 086 units to 31 867. This was despite high levels of demand for new vehicles according to WesBank’s application data. The vehicle financier said application numbers for new car finance through its in-house and dealer channels were similar to those experienced towards the end of last year and at higher volumes than June 2019.

In a statement released last night, WesBank’s head of marketing Lebogang Gaoketse said: “There were a number of key changes to market behaviour that could be the beginning of new trends as car buyers adapt to short-term budget pressures as a result of the pandemic. We expect these may become longer-term changes as the impact of Covid-19 ripples through the value chain.”

Infographic courtesy of WesBank.

Most notable of these trends was the uptake of fixed-rate deals, an opportunity provided no doubt by the particularly low interest-rate environment. South Africans have experienced a 2.5% reduction in interest rates since March, providing some relief for indebted consumers. 

While rates will inevitably increase again in the short- to medium-term as outlined in the Supplementary Budget presented last week, consumers and businesses have taken advantage of the opportunity to jump into a new car during the month of June.

What about pre-owned market activity in SA in June?

The South African used car market that really pumped in June, performing better than it did last month. The total value of used car sales for the month of June 2020 increased by 46% versus May 2020, while the market in the Western Cape – which saw a 101% increase in sales last month – is really on the boil. This is according to AutoTrader CEO George Mienie, who confirmed that the Volkswagen Polo Vivo was the most popular used car sold in that province during June 2020.

Over  25 000 used vehicles worth R7.3 billion were sold during the month of June – versus 17 000 cars in May (valued at R4.9 billion). Vehicle searches increased in June too – up from 39.9 million in May to 43.9 million on the AutoTrader website.

Infographic courtesy of AutoTrader.

Mienie said this encouraging growth in the market is positive evidence of changing consumer confidence. “The move to Lockdown Level 3 has clearly seen consumer sentiment improving,” he noted.

Proving that South African motorists are indeed brand loyal, the top five brands that sold and were searched for remained unchanged. “In both months, Volkswagen ruled the roost in the sales statistics, followed by Toyota, Ford, BMW and Mercedes-Benz. BMW reigned supreme in the search statistics, followed by Volkswagen, Mercedes-Benz, Toyota and Audi,” Mienie expounded.

There were a number of changes in June when it came to the specific models that people were searching for to buy. The Toyota Fortuner, for instance, performed far better in June, improving its position on the most sold list from seventh in May to fifth in June. The Jeep Wrangler was knocked out of the ten most sold individual models (it fell to 23rd position in June). And the perennially popular Toyota Hilux bounced back to the top of the podium for single cab sales (in May it was toppled by the Nissan NP200).

Interestingly, WesBank’s average deal size has also increased substantially. “Increases in deal size between 10 and 15% 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 the debt in every deal,” says Gaoaketse.

What will July 2020 vehicle sales look like?

Market activity (new and used) is expected to remain low for the remainder of the year as the uncertainties (particularly the economic impact) of the novel coronavirus pandemic continue to weigh on the shoulders of South African consumers and businesses.

Household budgets were already under pressure before the lockdown and within an economy that is now expected to shrink 7.2%, many potential buyers will delay their purchase decisions, according to WesBank.

The used car market is expected to continue to show higher levels of demand, providing better levels of affordability, but, some analysts expect to see an increase in used car values as a result.

“June sales begin to provide a picture of what to expect for the remainder of the year,” Gaoaketse concluded. “While that picture provides many challenges for both buyers and sellers, it includes positive elements that will test the industry’s resilience to survive.”

SA’s NEW PASSENGER CAR SALES BY BRAND FOR JUNE 2020

  • ABARTH - 2

  • ALFA ROMEO - 15

  • AUDI - 510

  • BENTLEY - 2

  • BMW - 759

  • CITROEN - 20

  • DATSUN - 126

  • FERRARI - 15

  • FIAT - 51

  • FORD - 860

  • GWM - 0

  • HAVAL - 612

  • HONDA - 180

  • HYUNDAI - 2 228

  • ISUZU - 36

  • JAGUAR - 30

  • JEEP - 53

  • KIA - 872

  • LAMBORGHINI - 4

  • LAND ROVER - 221

  • LANDWIND - 34

  • LEXUS - 52

  • MAHINDRA - 190

  • MASERATI - 4

  • MAZDA - 804

  • MERCEDES/SMART - 879

  • MINI - 91

  • MITSUBISHI - 110

  • NISSAN - 359

  • OPEL - 74

  • PEUGEOT - 60

  • PORSCHE - 109

  • RENAULT - 1 151

  • SUBARU - 32

  • SUZUKI - 1 382

  • TOYOTA - 3 697

  • VOLKSWAGEN - 3 576

  • VOLVO - 64

TOTAL 19 264

SA's NEW LCV SALES BY BRAND FOR JUNE 2020

  • CHANGAN - 25

  • FIAT - 8

  • FORD - 1 275

  • GWM - 155

  • HYUNDAI - 194

  • ISUZU - 1 669

  • IVECO - 0

  • JMC - 5

  • KIA - 69

  • MAHINDRA - 327

  • MAZDA - 17

  • MERCEDES - 88

  • MITSUBISHI - 25

  • NISSAN - 1 525

  • OPEL - 14

  • PEUGEOT - 0

  • RENAULT - 1

  • SUZUKI - 51

  • TOYOTA - 4 444

  • VOLKSWAGEN - 297

Total 10 189

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