There were no fireworks for Naamsa (National Association of Automotive Manufacturers of South Africa) in the new vehicle sales statistics for the first trading month of 2021, with the results being in line with the industry’s representative body’s expectations.
Naamsa, which represents South Africa’s Original Equipment Manufacturers and major automotive brands operating in the country, has also projected a lengthy timespan of around three years that the industry may need to recover to pre-COVID-19 retail sales levels.
Signs of improvement
While “showing signs of gradual improvement”, sales in January were sluggish and underperformed against the comparative pre-COVID-19 retail month in 2020. Exports however provided more positive numbers for the industry.
Commenting, in a “media note” released this week, Naamsa said that the gradual monthly recovery in the domestic new vehicle sales volumes continued during the month but that the decline, compared with the pre-COVID-19 first month of 2020, was in line with industry expectations.
The numbers at a glance
The industry reported aggregate domestic sales of 34 784 units, which reflected a decline of 5 629 units, or 13,9%, from the 40 413 vehicles sold in January last year.
Export sales however, recorded a second consecutive month of solid growth in January 2021 and at 22 771 units reflected an increase of 6 468 units, or 39,7%, compared to the 16 303 vehicles exported in January 2020.
The sales figures by major market segments
Overall, out of the total reported industry sales of 34 784 vehicles, an estimated 28 716 units, or 82,6%, represented dealer sales, an estimated 11,4% represented sales to the vehicle rental industry, 3,5% sales to government, and 2,5% to industry corporate fleets.
Naamsa’s first quarter outlook
“For the first quarter of 2021, trading conditions in the new vehicle market are expected to remain challenging due to slow demand compared [to] the pre-Covid-19 first-quarter comparison, exchange rate volatility and the negative impact on household expenditure by fuel and electricity price increases.”
The association, however, expects a rebound in the new vehicle market for 2021 – in line with projections for positive GDP growth.
Naamsa expects current low-interest rates and low inflation to serve as catalysts to stimulate the new vehicle market.
“A full recovery to pre-Covid-19 new vehicle sales levels could take around three years.”
Overall vehicle sales in 2020 fell to their lowest level in 18 years, the Association noted.
Economists from FNB see the sector facing several headwinds – linked to increased cases of Covid-19 in key trade destinations that will impact exports and vehicle manufacturing supply chains.
“In addition, increased competition from the used vehicle market and weak domestic demand – which is further compounded by constrained household finances (even with low-interest rates) and high unemployment – also bode ill for the industry,” it said in a weekly note.
Similarly, Naamsa said that its recovery depends on the improvement in the economic climate of the SA automotive industry’s main trading partners.
The new passenger car market reported an 18% decline with just over 23 000 cars sold, compared to about 29 000 cars sold in January last year.Read More