SA car sales | New vehicle sales show impressive resolve, but used car demand is up

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• More than 43 000 new vehicles were sold in September 2021.

• The number is 15.8% higher than the same period in 2020.

• Wesbank says that demand for pre-owned vehicles has also seen an increase.

For more motoring stories, visit Wheels24

The new vehicle market continued to recover some momentum during September 2021 following the disruptions experienced in the economy during July. Building on August sales successes, September sales continued to capture reassuring consumer demand and provided some reassurance for a stronger final quarter.

According to Naamsa, the Automotive Business Council, September new vehicle sales increased 15.8% to 43 130 units compared to the same month last year. More reflective of actual performance, the month's sales were up 4% relative to August sales, which was the second-best sales month this year prior to September's performance.

Although new vehicle sales are 30.1% up year-to-date to 345 172 units compared to the same pandemic-impacted period last year, WesBank continues to finance well over two used vehicles for every new vehicle.

car sales

Impacting sustainability

The sales mix across new and pre-owned is an interesting factor impacting the sustainability of the motor retail sector during the pandemic. The relationship between new and used vehicle sales is a cyclical and complementary one, particularly in the dealer and, therefore, the consumer space. While the manufacturers are naturally focused on selling new vehicles, the pre-owned market influences brand affinity. However, on a retail level, sales are sales, whether new or used, providing mobility solutions to customers and cash flow for dealers.

There's no denying the strange times the motor industry faces. What has been prevalent throughout, however, is the sector's unfailing resilience to prevail.

While demand in the pre-owned market remains very strong, used car price inflation may impact this momentum. That demand may become more about preferential specification than affordability in a time when the trade is paying a premium on certain pre-owned models.

WesBank sees this demand as reassuring across the vehicle market, however. While stock availability in the new vehicle market remains stressed, forcing some consumers into the pre-owned market, the sheer demand remains encouraging for the industry once global stock shortages are alleviated.

Toyota Corolla Quest
2021 Toyota Corolla Quest

LCVs impacted most

Most impacted by that stock situation is the Light Commercial Vehicle (LCV) market. LCV sales declined 10.9% during September compared to September 2020 to record 10 943 sales. This is 802 units or 6.8% less than last month. While dealer channel sales in this segment were less affected (down 7.2%), a noticeable lack of Government volume (down 64%) impacted the segment.

Driving the market growth was the 30.5% gain in passenger car sales year-on-year. September's passenger car volume of 29 538 units was bolstered by 4 951 sales into the rental market and was 8.5% ahead of last month's market. Dealer sales also swelled 17.3%, providing that much-need sustainability injection into the retail space.

The Reserve Bank's decision last month to maintain interest rates will continue to provide stimulus to the market, whether new or used. Both sectors' sales will ultimately contribute to the overall recovery of the South African motor industry.

Lebogang Gaoaketse is the Head of Marketing and Communication at WesBank.

Lebogang Gaoaketse
Lebogang Gaoaketse
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