April new-vehicle sales show recovery is continuing, but supply problems loom large
By: Irma Venter
On paper, the South African new-vehicle market grew by an astounding 6 133.3% in April compared with the same month last year.
However, this is not a fair comparison, as South Africa was in a hard Covid-19 induced lockdown during April last year, with only 574 units sold for the entire month.
A more appropriate comparison would be to contrast last month’s sales with that of March, 2021.
Doing so reveals that April’s sales, at 35 779 units, were 17.6%, or 7 649 units, lower than March’s numbers.
“April sales are difficult to interpret within the context of lockdown,” explains WesBank Vehicle and Asset Finance marketing and communication head Lebogang Gaoaketse.
“On balance, however, April sales lost less against March than March sales had gained against February, meaning the market remains in its state of slow recovery.”
March sales had increased 18.4% over February.
Sales during April will also have been impacted by the numerous public holidays, providing fewer selling days during the month.
“Reassuringly, however, is that sales during the first four months of the year remain 28.3% ahead of the corresponding period last year,” notes Gaoaketse.
National Automobile Dealers’ Association chairperson Mark Dommisse adds that while new-vehicle sales in April were down from last month, there are still encouraging signs of market recovery when considering it was an especially short trading month with only 19 selling days.
“We cannot compare sales with April 2020 as we were in the harshest Level 5 lockdown at this time last year. It’s also difficult to track where we are quarter-on-quarter, but, with an average of 36 000 units [a month] sold over the first four months of 2021, the new car market is in a relatively healthy state.”
He warns, however, that the industry must be mindful of potential setbacks in coming months.
“In contrast to 2020, we have customers, but a shortage of many models due to an increasing number of global logistical challenges which are impacting negatively on the current and future new vehicle stock availability in South Africa.
“We’re also experiencing a global scarcity of microchips, as well as steel, resin and rubber.”
A renewed surge of Covid-19 in India is also presenting a challenge.
“We now unfortunately have the added complication of severe lockdowns in India, limiting production. India is a large source of built-up vehicle imports, particularly in the entry-level segment of the [local] market,” says Dommisse.
He adds that the large-scale vaccination programme in South Africa “cannot start fast enough to bring more normality to the country”.
Looking ahead, Naamsa | The Automotive Business Council CEO Mikel Mabasa says that renewed activity in the rental market, low interest rates, the easing of lockdown restrictions, as well as all five subcomponents of the ABSA Purchasing Managers’ Index being in positive terrain for the first time since early 2012, should all serve to support business and consumer sentiment and, subsequently, the new-vehicle market in 2021.
However, he also warns against Covid-19-induced manufacturing supply chain disruptions.
Mabasa adds that although this year’s new-vehicle market is expected to rebound substantially compared with last year, it is important to note that aggregate new-vehicle sales in 2020 dropped to a level last seen 18 years ago.
This means that a recovery to pre-Covid-19 sales levels could take at least three years.