Will car sales ever recover in South Africa? NADA and WesBank weigh in
JOHANNESBURG - “The month of July saw the South African economy being hit by the ‘perfect storm’ and the impact on the motor industry was huge,” says Mark Dommisse, the Chairperson of the National Automobile Dealers’ Association (NADA), after studying the latest vehicle retail sales figures distributed by naamsa.
“The effect is not limited to July and will in all likelihood have an ongoing negative effect for several months to come. Dealers face stock shortages while local manufacturers battle to keep production going due to disruptions in the component supply chain caused by global semi-conductor shortages and the cyber-attack on the port operating systems, disruptions in KwaZulu-Natal and parts of Gauteng as well as the reimposition of Level 4 Lockdown,” Dommisse explains.
“However, the sales figures are certainly not as bad as we had feared, with the aggregate total sales in July of 32 949 units being slightly better – 1.7 percent up - than the situation a year ago. Dealers also did well again, being responsible for an estimated 86 percent of sales, with rental companies taking an encouraging 9.2 percent, while 2.7 percent of sales went to industry corporate fleets and 2.1 percent to government. On a year-to-date basis our total sales after seven months of 2021 stand at 260 466 units, which is 33.7 percent higher than at the same time last year, which is heartening.
“Another blow for the industry at the end of the month, was the passing of Dr Johan van Zyl, Executive Chairman of Toyota SA Motors. It is fortunate that during his life he had the satisfaction of knowing the high esteem in which he was held by his colleagues and the broader industry. His inspiring leadership has created a company with an enviable reputation both in South Africa and abroad. As we reflect on the high standards he advocated, we are reminded of the many benefits dealers, as well as the broader automotive ecosystem, have enjoyed. He was a true inspiration to many who had the privilege to know and work with him,” adds the NADA Chairperson.
FINANCIER’S PERSPECTIVES
According to WesBank, the momentum that was gathered in South Africa’s new vehicle sales recovery this year was given a harsh blow during July as civil protests tore through large parts of the country. In addition, the bank also says that the majority of the sales month was spent in adjusted Level 4 lockdown and the ongoing impact of stock shortages was exacerbated by disruptions in the logistics chain at ports.
“July brought the fragility of the motor industry back into stark focus,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Not only did the month bring physical impacts, but the resulting consequences in business and consumer confidence will continue to challenge the industry’s recovery for months to come. Once again, the industry’s resilience is being put to the test.”
WesBank remains optimistic, however, for the industry’s continued recovery. “Rejuvenation of rental fleets, progress in the country’s vaccination rollout programme and revitalisation of the economy in general will all contribute towards building the South African motor industry,” adds Gaoaketse. “The industry needs to remain focused on delivery and the inevitable demand that will rise in the medium term.”
“While the country encountered yet another speed bump during July, there are many reasons to believe in the continued recovery of the market,” says Gaoaketse. “Low interest rates, the return of adjusted Level 3 lockdown regulations, and some improvement to civil stability will provide a good basis for the industry’s determination to once again shine through.”
