South Africa’s car dealers are cautiously optimistic about car sales in 2021, following the release of the November new vehicle retail sales figures by the National Association of Automobile Manufacturers’ of South Africa (Naamsa).
The total dealer retail sales figure of 33,547 units in November was 5% above the October figure, but still 3.8% lower than the sales achievement in November 2019, when 34,861 units were retailed.
Dealer sales equated to 85% of total sales in November 2020, with the rental market taking 8%, the government 3.9% and corporate fleets the remaining 2.8%.
“Even though the retail sales figures remained muted in November, which once again reminded us of the challenges facing the overall automotive industry in these times, the general feeling of dealers is that they are slightly more hopeful than they were a few months ago,” said Mark Dommisse, chairperson of the National Automobile Dealers’ Association (NADA).
“The monthly sales decline across the entire new car market has remained steady since halfway through 2020.
“What we need to know now, is what direction the government is going to take to handle the growing number of coronavirus infections while still preserving a recovering economy.”
Dommisse said that the pricing of pre-owned vehicles is currently holding up well, but there is a concern about a decrease in the supply of used vehicles. He added that he believed this shortfall will continue into 2021 and is problematic for the industry.
“Fortunately, interest rates are remaining low, and we still have the rand holding up against the dollar as well as a stable oil price. The looming wage dispute between the government and the trade unions could affect the economy.
With economic uncertainty, customers are wary of spending on big ticket, durable items. Instead they are tending to hold onto savings and disposable income for the time being, he said.
Dommisse said another problematical area is the backlog in renewing vehicle and driver’s licences as well as the threat of the rigorous AARTO regulations taking effect without amendment, which will have far-reaching negative outcomes for the motor industry.
“The good news is that the industry has started on its long road to recovery with fairly consistent sales results over the past five months.
“This is bringing a measure of stability to the market. We also know that the pandemic has altered the way many people travel and anticipate ongoing changes in the commute between home and work into the future.
“This will impact on the type of vehicles they buy or whether a significant number will switch to shared transport options.”