Vehicle sales to remain low as tight budgets, load shedding add to lockdown woes

  • New vehicle sales for August 2020 declined 26.3% compared to the previous year.
  • While demand for new vehicles improved, activity in the market is expected to remain low for the remainder of the year.
  • Heavy trucks, busses and medium commercial vehicles reported gains from the previous year, says Naamsa.

New vehicle sales for August are down 26.3% from the previous year, but this is still an improvement from the rate of declines reported in the prior four months of the year.

The National Association of Automobile Manufacturers for South Africa (Naamsa) on Tuesday released the new vehicle sales data for August. July had registered a decline of 35.8%. Vehicle sales had declined by a record 98.4% in April as a result of lockdown.

Domestic sales for new light commercial vehicles, bakkies and mini-buses fell 19.4% compared to last year.

Medium commercial vehicles, however, ticked up 7.7%, while heavy trucks and buses increased 9% compared to last year.

Passenger sales declined 32.6%.

"Indeed, consumer confidence is at near historic lows, with many households cancelling or delaying discretionary, high value purchases," said Investec economist Lara Hodes.

For the year to date, sales have fallen 40% compared to the same period last year.

First lockdown, now load shedding

Export sales declined 46.9% compared to last year. "Positive news is that the domestic automotive industry's major export destinations are starting to ease their lockdown restrictions with many actively stimulating their new vehicle markets with financial government incentives," Naamsa said.

Naamsa noted that new vehicle demand had "improved slightly", especially as lockdown restrictions eased to Level 2 during August. But activity in the new vehicle market is expected to remain low for the remainder of the year, it said. This is due to "uncertainties" relating to the economic impact of Covid-19, consumers and businesses have to adapt to short-term budget pressures.

"Not only will the economy have to contend with consequences of the economic lockdown, it now has to deal with further rolling blackouts which comes at the worst possible time for the South African economy," the Naamsa statement read.

Eskom has implemented load shedding at different stages of lockdown due to breakdowns at generating units.

Hodes similarly said a protracted recovery for the automotive sector is expected, due to the unprecedented impact of the pandemic on consumers and the economy.

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