Heels & Horsepower Magazine

Here are the sales figures for October 2021

Press Release: WesBank

Stock shortages continued to thwart South Africa’s new vehicle market during October. However, the market continued to show a robust performance, despite the volumes being lower than September.

According to naamsa | the Automotive Business Council, 41,035 new vehicles were sold during October, an increase of 6.1% over the same month last year. Although September sales were the second-best volume month this year, October sales were 4.9% slower than last month. It is also important to note the context of October sales within the four months this year that have sold more than 40,000 units.

“The new vehicle market appears to be recovering strongly, demand out-stripping current supply constraints,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “The second half of the year has performed strongly since the mid-year lockdown restrictions, with the market trading above 40,000 units a month for the past three months.”

WesBank’s own data indicates a resurgence in the South African motor industry. “While we have seen high demand for pre-owned vehicles over the last two years, a slow shift back towards new vehicles may be currently underway,” says Gaoaketse. “Compared to a year ago, applications for to WesBank for new car deals rose 1.8% during October, while applications for pre-owned deals declined 5.9%. In addition, the bank’s used-to-new ratio has shifted over the 12-month period from 2.25 used vehicles financed for every new vehicle a year ago, to 2.08.”

However, the issue of supply is a global factor that skews the overall market picture. “Until global manufacturing stabilises off the back of the pandemic and resolves its micro-chip shortages, consumer and business purchase decisions will be swayed by availability and necessity,” says Gaoaketse. “The good news is that South African car dealers are in a much more sustainable position than a year ago.”

South Africa’s new passenger car market was up 3.1% to 27,496 units, displaying a robust consistency throughout the year. The Light Commercial Vehicle (LCV) market remains far more volatile. While it was down 10.9% in September, the segment bounced back to increase 15.9% during October to 11,188 sales.

A similar trend played out in the dealer space with passenger car and LCV volumes up 2.7% and 16.5% respectively. The market once again benefited from a sizeable volume of rental sales, with 5,002 passenger cars and 730 LCVs selling into fleets.

“Although the market looks in better shape, affordability continues to be a major consideration,” says Gaoaketse. “Significant fuel price hikes this month and the prospect of interest rates potentially increasing with the return of inflation are factors for consumers to consider when purchasing their next vehicle.” 

A look at vehicle sales figures one year since lockdown began.

As the country observed the first-year anniversary since lockdown commenced, new vehicle sales provided reason for the industry to celebrate.

Twelve months ago, the country reeled to news of the pending lockdown as showrooms prepared to close their doors, consumers headed home, and vehicles were only let out for essential services. In March 2020, the new vehicle market plummeted 29.7% compared to March 2019 to record just 33,545 sales. The grip on the South African motor industry had tightened quickly.

One year later, the resilient industry is fighting a hard recovery. But March 2021 sales put one of their best feet forward.

According to naamsa, the Automotive Business Council, March sales recorded 44,217 new vehicle sales. Compared to March last year, this represents a 31.8% increase in sales year-on-year, although the downtrodden March 2020 performance should be critically considered.

With interest rates remaining stable at their low levels, a constantly – albeit slowly – improving supply of imported vehicles, and a slightly healthier economy operating within eased levels of restrictions, we expect the market to continue recovering well.

– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance

Reassuringly, March sales show a 18.4% increase over February this year, a number more indicative of the real strength of the market,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance. “With many of the brands indicating difficulty securing sufficient stock to meet demand, the new vehicle market seems to be well on its way to recovery.”

Passenger car sales were up 23.4% to 27,330 units year-on-year and 13.2% up on February 2021. With some renewed activity in the rental market, the consumer demand was noticeable with dealer sales in the segment up 24.2%.

Light Commercial Vehicles (LCVs) delivered a staggering 52.4% improvement over March last year to sell 14,375 units. This performance means the LCV segment is up 13.2% year-to-date and hopefully represents a surge in business confidence. The majority of activity in the segment remained on the showroom floor with dealers selling 61.1% more bakkies than they did a year ago.

“With interest rates remaining stable at their low levels, a constantly – albeit slowly – improving supply of imported vehicles, and a slightly healthier economy operating within eased levels of restrictions, we expect the market to continue recovering well,” says Gaoaketse. “While we have seen a significant increase in the average deal size financed by WesBank, we don’t expect new vehicle prices to increase dramatically. This will also provide added stimulus to the market and is a positive sign of consumer sentiment and ability to participate in the new vehicle market.”

The strong March performance made an encouraging impact on year-to-date sales. First quarter sales are just 0.9% down on the same period last year with 116,225 sales recorded during the first three months.