Lockdown | New vehicle sales plummet 98.4% in April

New vehicle sales plummeted by a whopping 98.4% in April, during a nationwide lockdown to slow the spread of Covid-19.

According to statistics on new vehicle sales released by the National Association of Automobile Manufacturers of South Africa (Naamsa), only 574 vehicles were sold, comapred to the 36 787 vehicles sold in the same month last year.

Most (318) of the vehicles sold in April were light commercial vehicles, and the rest (105) were passenger cars. Industry wide, the volume of sales is down 32.1% for the year to date.

"No one should be surprised because we didn't sell nor export vehicles in April", said Michael Mabasa, Naamsa CEO. Naamsa's members include auto-manufacturers such as Toyota, Isuzu, Volkswagen, BMW, Ford, Nissan and Mercedes-Benz.

Naamsa previously reported that new vehicle sales for March, totalling 33 545, declined nearly 30%, year-on-year. At the time, the association attributed the decline to challenging economic conditions in SA as well as developments related to Covid-19.

Mabasa said that vehicle and automotive component production would gradually ease back into production, under strict risk-adjusted measures, as the country takes steps to combat Covid-19.

"In this unprecedented time, the motor industry is experiencing unchartered conditions and grappling with the solutions to address it," said Lebogang Gaoaketse, head of marketing and communication at vehicle and asset financier WesBank.

The automotive industry contributes 6.9% to GDP – 4.4% of is this attributed to manufacturing and 2.5% is attributed to retail. The industry accounts for 30.1% of the country's manufacturing output and vehicle components are exported to 155 international markets, according to Naamsa. The manufacturing side of the industry employs more than 110 000 people and the sector as a whole supports 457 000 jobs, both directly and indirectly.

"The industry's significant 6.9% contribution to GDP means that many jobs are potentially impacted, across manufacturing and retail, as is foreign currency revenue from exports.

"Mobility plays a vital role in providing the necessary stimulus to all sectors of the economy to literally get moving," Gaoaketse commented. "We should expect consumers to be slow in their return to the car market as they adapt to social distancing measures and remain cautious about their own budgets given the uncertainty."

Treasury has projected that the economy could contract as much as 16.1% due to the impact of Covid-19. Job losses could be between three million and seven million, with the manufacturing industry among those which are worse affected, Fin24 previously reported.

Earlier, Absa reported that business activity in the manufacturing sector crashed to an all-time low in April as manufacturing output came to a standstill due to the lockdown. Many of the respondents to the survey said that zero production took place during the lockdown. Overall, the Purchasing Manager's Index declined only moderately from 48.1 to 46.1. In April only the manufacture of essential goods was allowed, due to the lockdown.

Investec economist Kamilla Kaplan said the April PMI suggested that the drop in actual manufacturing production was sharper than that reported during the 2008/09 global financial crisis. "The easing of the lockdown level from five to four on 1 May will not offer much relief as it still precludes much of the manufacturing sector from operating," she said.

Kaplan had expected car sales to be near-zero due to the lockdown, and projected a decline of nearly 90%.

"The month of April typically sees a slowdown in sales growth owing to public and Easter holidays. However, this is largely irrelevant in view of the full lockdown in April that saw the auto retail network closed," Kaplan said.

In a commentary on the latest vehicle sales statistics, Nedbank said that the outlook for new vehicle sales for the rest of the year had been "dimmed" by the effects of the Covid-19 pandemic. 

*This article was updated at 09:30 on 5 May, 2020 to includ comment from Naamsa CEO Michael Mabasa. 

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