Vehicle market still in sorry state

New-vehicle sales more than doubled in June from May and were more than 5,000% better than April.

But even the most determined good-news merchant will find it hard to deny that the local market is in a sorry state.

Halfway through the year and after three months of lockdown, aggregate car sales by the end of last month were 34.8% behind those at the same stage in 2019 — 109,173 against 167,537.

Throw in minibus taxis, bakkies, trucks and buses, and the total market deficit was 36.9% — 162,570 against 257,624.

No-one is sure what is going to happen in the coming months.

Marketers and analysts are predicting a full-year overall market decline of anywhere between 20% and 50%.

What is clear, however, is the market is fighting back from its near-death experience in April, the fiercest Covid-19 lockdown month, when a mere 547 vehicles were sold.

In May, as the lockdown eased and motor dealerships started to reopen, the number grew to 12,932.

Last month, the first full sales month since February, this leapt to 31,867, including 19,624 cars.

To put this in perspective, however, last month’ smarket was 30.7% weaker than in the corresponding month of 2019.

Still, even this was an improvement, after year-on-year deficits of 98.4% in April and 68% in May.

Standard Bank’s head of automotive retail finance, Cyril Zhungu, described June’s sales as pleasing, given the previous virtual halt.

He said motor companies and their dealers responded well to strict health protocols limiting their operations.

It also helped that more government licensing centres, which enable buyers of new vehicles to complete registration and ownership formalities, had resumed operations last month.

Many failed to open in May despite being allowed to do so, creating a severe sales logjam in parts of the country,

Zhungu, who believes the market will shrink 30% this year, said low interest rates were encouraging some vehicle buyers despite the economic recession and low business and consumer confidence.

However, WesBank marketing head Lebogang Gaoaketse said: “Market activity is expected to remain low for the remainder of the year as the uncertainties of the pandemic continue to bring pressure to bear, for consumers and business alike.

“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.”

Vehicle exports are also struggling to regain headway.

In April, the industry shipped out 901 vehicles and in May, 11,901.

Last month, this grew further, to 13,595, which was 34.9% less than the 20,840 of June 2019.

Midway through the year, aggregate exports of 108,933 were 34.8% behind 2019’s 182,361.

National Association of Automobile Manufacturers of SA CEO Mike Mabasa said yesterday the fate of exports was not in SA’s hands.

Economic activity in SA’ sexport markets had declined drastically because of Covid-19 and the recovery timeframe was difficult to predict, he said, though numbers should gain momentum.