'Consumer uncertainty' rife as new vehicle sales drop to new lows since August 2020

• New vehicle sales in January 2021 has been the lowest since August 2020.

• 34 784 new vehicles were sold last month.

• February 2021 is likely to be similar to January.

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A drop of 18% in the new car market in January, compared to January 2020, is a clear indication that the economic squeeze is on for vehicle buyers in South Africa.

The light commercial vehicle market was only 4.9% lower month-on-month, with medium truck sales unchanged and sales of heavy trucks and buses up by 6.6%, indicating that businesses still need vehicles. Still, car buying consumers are delaying new passenger car purchases.

Total retail sales in January accounted for 34 784 vehicles, 13.9% down month-on-month. This is the lowest industry total since August 2020, while sales through the dealer channel amounted to only 82.6% of this total, making it the worst month for dealers since the first lockdown in March 2020.

Volkswagen Polo
2021 Volkswagen Polo

Soft market

The market in January was soft, with a shortage of supply of specific models across the brands. However, at NADA, believe that the restaurant, beach and alcohol bans have influenced the need for driving for several months now, which means many ordinary motorists are delaying the purchase decision.

The continued lockdowns, as well as the second wave of infections, have resulted in a great deal of consumer uncertainty, which was reflected in generally disappointing sales in all sectors of the economy during the past festive season.

A bright spot in the January sales figures was that 11.4% of total sales and 16.1% of car sales were taken up by the rental industry which had drastically de-fleeted from the first lockdown time almost a year ago.

READ: 'Make new vehicles more affordable and boost sales by 28 000 units' per annum - NADA

There were also heartening results from exports of built-up vehicles, which are an indicator of business well-being for local vehicle manufacturers. Export sales of 22 771 units in January reflected an increase of 6 468 units or 39.7%, compared to the 16 303 vehicles exported in January 2020.

February is likely to be little better than January as consumers remain reticent to commit to the purchase of big capital assets such as cars.

Mark Dommisse is the chairperson of the National Automobile Dealers' Association.

Mark Dommisse
Mark Dommisse
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