SA new car sales gaining momentum despite challenges

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 11,208 units during June 2021 had recorded an increase of 986 units, or a gain of 9,6%, from the 10,222 light commercial vehicles sold during June 2020.   Sales for medium and heavy truck segments of the industry reflected a mixed performance and at 687 units and 1,653 units respectively, showed an increase of 110 units, or 19,1% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses a decline of 57 vehicles, or a fall of 3,3%, compared to the corresponding month last year. The June 2021 exports sales number at 28,384 units reflected an increase of 9,576 vehicles, or 50,9%, compared to the 18 808 vehicles exported in June 2020.

For the first six months of 2021 vehicle exports were 65,8% above the corresponding period last year.  The new vehicle market continued its gradual recovery during the month of June 2020 in the face of a number of challenges and also opportunities. Ongoing stronger sales through the dealer channel signals improved consumer and business sentiment, rental companies are re-fleeting while the delayed replacement cycle, due to lockdown restrictions in 2020, are catching up in contributing to improved new vehicle sales.

However, of concern are persistent electricity supply disruptions, port delays and the third Covid-19 wave of infections. The vaccine rollout is slow and a third wave of the pandemic threatens to dent the momentum in consumption in the country, especially if the adjusted alert level 4 lockdown restrictions are extended for longer than the initial two weeks. Compared to the first six months of 2020, the new vehicle market was 40,1% above the corresponding period last year, but compared to the pre-Covid-19 first six months  2019, the new vehicle market was still 11,7% below the corresponding period 019, highlighting that a full recovery would be protracted until around 2023.

Vehicle exports continued their upward momentum during the month, and according to the ABSA Purchasing Managers’ Index (PMI), the outlook for manufacturers targeting the European and US export markets remains very bright, with recent international PMI readings remaining at or near record-high levels.

In terms of a timeframe for a full recovery to pre-Covid-19 vehicle record export levels, much will depend on the ongoing path and management of the global pandemic.