The coronavirus pandemic and subsequent lockdown have given a significant shake-up to South Africa’s retail motor industry, says the National Automobile Dealers’ Association (NADA).
NADA noted that the country’s new and used car sales were slow in May, but the pace is expected to increase in June as potential buyers fear previously unexpected price increases on new models due to the weakness of the rand, and may buy existing stock.
The group said that it now expected a substantial inflow into the market of used vehicles from rental companies, who are defleeting due to the lack of business, particularly in the tourism industry.
Rental companies have been buyers of substantial numbers of new vehicles in recent years and are a valuable supplier to the pre-owned market, it said.
“This will be a once-off occurrence which will improve the sales rate of pre-owned vehicles. But the problem is that the decrease in the overall size of the rental fleet will limit the availability of these cars in the future,” said Ryan Seele, managing director of the Mortimer Motor Group.
Motor retailers are adapting to new ways of doing business added Mark Dommisse, NADA chairman.
Dommisse said that motor retailers are particularly resilient and have already faced a host of challenges over the years, from the global economic downturn in 2008/9 to disruptions caused by industrial action.
Data from AutoTrader shows that many of South Africa’s most-loved vehicles are selling for R10,000 to R40,000 less than what they cost in March 2020, prior to lockdown.
This revelation comes following an analysis of sales data on AutoTrader. The company’s team of data specialists analysed the average prices for cars sold in March (pre-lockdown) compared to those sold in May.
AutoTrader chief executive George Mienie said the price reductions vary from vehicle to vehicle. “A Toyota Corolla with 89,000km to 93,000km on the clock sold on average for R228,484 in March and for R184,300 in May – that’s R44,184 less for the same car.
This trend can also be seen in bakkies. The Isuzu KB, for example, with between 132,000km and 134,000km in mileage, sold for on average R11,007 less in May versus March – a price drop from R223,205 to R212,198, he said.
Even the country’s most popular used vehicle – the Ford Ranger – recorded a reduction on average of R10,263 for a car with a mileage between 87,000km and 88,000km, dropping from R320,454 in March to R310,191 in May.
AutoTrader anticipates pricing reductions like these to continue in June.
“The entire market is down 4.1% year-on-year as recorded in our Retail Pricing Index. If you were considering buying a car before lockdown and you still have the ability to do so, now is a good time,” Mienie said.
As the country’s largest motoring marketplace, car searches and sales via AutoTrader have long been regarded as an accurate barometer of consumer buying patterns.