Vehicle Sales Increase Despite Disruptions

  Colin Windell


 9 Jun, 2022

If nothing else, the South African automotive industry is resilient - and, despite foreign disruptions, and those caused locally by the floods in KwaZulu-Natal, the overall market grew by 2,1% compared to May of last year.

“New car buyers who held off purchases during the pandemic over the past two years are now renewing their vehicles thanks to somewhat normalised retail environments,” says Alex Boavida, Vice-Chairperson of the National Automobile Dealers’ Association (NADA).

Toyota took the hardest hit with the closure of its plant in Prospecton. 

Leon Theron, Senior Vice President of Sales and Marketing at TSAM, says: “We are content to have held on to the market leader position for another month since the temporary closure of our plant in Durban. 

The inventory diversity at TSAM helped the brand weather the storm, with a model for almost every segment. Imports sustained the business when production ceased locally.

There is no reprieve in sight for export markets as multiple headwinds like rising interest rates, supply chain disruptions, resurging COVID-19 waves and producer and consumer inflation at the highest levels in decades persist. 

However, naamsa: The Automotive Business Council says prospects for 2022 remain optimistic on the back of further new locally manufactured model introductions during the year and probability for exports, despite moderating global economic growth. 

Aggregate domestic new vehicle sales in May 2022, at 39 177 units, reflected a modest increase of 819 units, or 2,1%, from the 38 358 vehicles sold in May 2021. Export sales recorded a fall of 11 013 units, or 29 9%, to 25 786 units in May 2022 compared to the 36 799 vehicles exported in May 2021.

The May new passenger car market at 27 437 units registered an increase of 3 318 cars, or a gain of 13,8%, compared to the same month last year. 

New light commercial vehicles, bakkies and mini-buses recorded a 2 691 units decline or a 22,6% fall. But, medium and heavy truck segments had performed better, showing an increase of 65 units, or 11,8% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses, an increase of 127 cars or a gain of 7,1%. 

“In uncertain times where volatility is a recurring theme, May presented unnecessary additional challenges to the market but fought bravely for recovery,” says Lebogang Gaoaketse, Head of Marketing and Communications at WesBank. “Supply constraints were also amplified by the impact of the floods in KZN on one of the market’s largest producers, not to mention the continued disruptions in logistics.”

“South Africans have seen fuel prices rise to record levels over recent months with a further massive increase announced for June 2022, despite the extension of the temporary reduction in the general fuel levy by government,” adds naamsa. 

“Although the economy will need to adjust to this new reality, long term solutions are required in an already unbearable inflationary environment which would worsen, along with negative secondary economic effects. On a positive note, the country has moved through its fifth wave of COVID-19 infections without the necessity of renewed lockdown restrictions.”

Less affected by the suspension of operations at the plant was TSAM’s parts distribution division in Boksburg. The organisation’s parts’ supply business distributed no less than 1,4-million items to domestic dealers and close to 280 000 pieces abroad last month.

Franchise dealers are noting a trend in the age of trade-in vehicles. 

According to NADA Chairperson, “Historically, the average age of vehicles exchanged for new models is around three or four years in line with normal ownership cycles. In recent months, however, dealers have seen this age increase to five or six years which indicates some pent-up demand during the pandemic is finally being satisfied after delayed renewals.”

The global semiconductor and parts supply shortages are still devastating the industry and suffocating showroom stock levels globally – particularly in the premium segment. Although it is difficult to predict when these constraints will ease, the general industry view is from 2023 onward.

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