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Almost No Sales in April, More Tough Times Ahead

  Leo Kok

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 6 May, 2020



New Vehicle Sales April 2020

The April 2020 sales statistics, published by the National Association of Automobile Manufacturers of SA, makes for gut-wrenching reading.

While Naamsa has not made detailed statistics available, the association has noted that only 574 vehicles were sold last month. Ford took the lead with 304 units sold, a massive 71% share of total passenger vehicles and light commercials, and Toyota followed with 93 units. Suzuki, having sold 12 units in total, managed to make the top five.

In comparison, last year the industry sold 36 794 vehicles in April and exported a further 33 090 vehicles. This month, the export sales were down to 901 units. This means that the domestic market is down by 98.4% and export sales fell by 97.3%.

Divided into segments, the market represented a total of 105 passenger vehicles, 318 light commercial vehicles and 151 medium, heavy and extra heavy trucks and busses.

WesBank, the leading financier for new vehicles, and Naamsa both say that the drop was to be expected. After all, the entire country was in lockdown throughout April and all manufacturers and most retailers were closed. Those retailers that remained open were allowed only to service and support vehicles used by essential services’ providers.

And while the drop in sales for April was expected, it does not mean that the industry knows what lies ahead in May and for the rest of the year. The government has indicated that vehicle manufacturing can restart at 50% of normal production, but it has still to rule on how and when vehicle retailers can return to work.

Smaller manufactures, such as Mahindra and Hyundai light commercials, may keep their factories closed until they have restarted local retail sales.

For the seven vehicle manufacturers, Ford, Toyota, Mercedes-Benz, BMW, Nissan, Isuzu and Volkswagen, the start-up of production is not solely reliant on the local vehicle market. This means that they can fire up production and start building cars and pick-ups for the export market, while they wait for the government’s directive on local sales. South African vehicle manufacturers export over 64% of their production.

We should keep in mind that close to 74% of all cars built in SA are destined for the European Union, so we would need to coordinate vehicle exports with the opening of our largest export markets.

At the same time, some manufacturers have to align their reopening with the directive from their global head offices, with some manufacturers saying that they will only return by mid-May and others contemplating a start in June only.

Restarting full production and retail are going to be a very tricky act. The manufactures will have to time their starting times with those of their local component manufacturers and with the flow of goods through our national ports, for imported parts and components. Only when all the parts and components are available will it make sense to get the production lines moving again.

As one senior executive in the industry remarked about the Naamsa sales figures: “We do not know if this is rock bottom or the tip of the iceberg, only time will tell.”

The smaller manufactures, such as Mahindra and Hyundai light commercials, may keep their factories closed until they have restarted local retail sales. Since they only build for the local market, restarting their factories – with its inherent costs – will not make sense until they can begin selling cars again.

The question is what lies ahead for vehicle sales. Vehicle dealers should know this week under what conditions will they be able to start selling cars and if trucks and motorcycles may also be sold.

Looking more broadly at the new vehicle market, it is almost inevitable that the industry will shrink dramatically in 2020. With April’s sales considered, the market is already down by more than 32% for the year and even when dealers reopen, it is not clear how many people will be willing to commit to a long-term vehicle lease in order to buy a new car.

As one senior executive in the industry remarked about the Naamsa sales figures: “We do not know if this is rock bottom or the tip of the iceberg, only time will tell.”



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