January vehicle sales burdened by several factors

<b>NEW CAR SALES:</b> Naamsa reports a drop in vehicle sales in May 2017. <i>Image: Quickpic</i>
<b>NEW CAR SALES:</b> Naamsa reports a drop in vehicle sales in May 2017. <i>Image: Quickpic</i>

• 34 784 vehicles were sold in January 2021. 

• In comparison to the same period last year, sales were down 13.9%.

• Passenger vehicle sales are down 18% compared to January 2020, with total sales of 23 853.

First National Bank's vehicle finance arm Wesbank says January's new vehicle sales stats were affected by the burden of the pandemic and continued economic pressure, and the resultant low levels of business and consumer confidence. 

There is a glimmer of hope as the market continued to show signs of its slow recovery towards the hope of a better 2021.

34 784 vehicles sold in January

According to the National Association of Automobile Manufacturers of South Africa (Naamsa), new vehicles sales were 13.9% down on January 2020 to register 34 784 units.

"January sales were in line with expectations considering the country started the sales year in a return to Level 3 lockdown," says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance.

"We expect new car sales to remain under pressure this year as a result of subdued demand from both retail and corporate sectors, as well as Government. However, the used car market will remain buoyant as consumers continue to seek to lower their vehicle-related expenses," Gaoaketse said. 

It remains sobering that 2020 recorded the worst industry performance in 18 years.

"Considering that 2020 sales were 29,1% down on 2019, the performance of the new vehicle market in the last quarter and in January this year remains reassuring," says Gaoaketse.

"It is also interesting to contextualise the broader economic environment over the last five years, the impact of which has merely been accelerated by the pandemic," continued Gaoaketse.

"The 2020 market is 38.4% lower than the 2015 volume of over 600 000 vehicles, indicating the sheer pressure of the past five years of recession. Then consider that the purely organic fall-off in sales during 2016 was 11.4% lower than 2015 – almost half the decline in sales last year due to the pandemic – and perhaps the motor industry is fairing quite well considering the circumstances," he said. 

Passenger and LCV sales suffer big volume losses

Passenger car sales took the brunt of the volume losses compared to last year, down 18% to 23 853 units.

Not even Light Commercial Vehicles (LCV) could muster a growth number that the sector had shown towards the end of last year. LCV sales were 4.9% down to 9301 units.

Entry-level, budget car segments continue to be in demand

While the current signs of improvement in Covid-19 infection rates look promising, the pandemic uncertainties will continue to impact the new vehicle market and the South African motor industry.

"The new car market has seen steady volumes in the entry-level and cost-conscious segments at the expense of the premium end of the market. We see no economic evidence to suggest that this will change significantly this year," says Gaoaketse.

While interest rates remained unchanged during January, they continue to be at historic lows. "Interest rates should remain at their low levels for some time in an attempt to stimulate market growth, but there will be little to no room for further cuts," says Gaoaketse. 

"This continues to provide a good opportunity for those consumers considering a new vehicle," he concluded. 

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