Do not get overexcited by the apparent surge in new-vehicle sales, says Nedbank. It is not as good as it looks.
Figures released on Thursday by the Automotive Business Council show that, in June, sales of cars and commercial vehicles totalled 38,030. That was 20.2% more than the 31,643 a year earlier. Counted separately, car sales improved 28%, from 19,134 to 24,482. The bakkie market grew much more slowly, as did the market for trucks.
Aggregate sales of all vehicles for the first six months of 2021 totalled 227,440 — 40.1% ahead of the 162,346 at the same stage last year. All these figures confirm that the market is bouncing back from its 2020 Covid-19 meltdown.
That bounce, however, is from a very low base. For a truer picture of market strength, says the Nedbank group’s economic unit, it is necessary to compare 2021 with the years 2017-2019, when the market enjoyed some measure of normality, even though it was shrinking.
Last month’s total vehicle sales were 17.2% lower than June 2019 and 17.3% lower than the 2017-2019 June average.
“The artificial situation created by the Covid-19 pandemic makes it challenging to draw meaningful inferences from (2020-2021) numbers. Although they reflect a recovery compared to pre-pandemic levels, it is clear that the sector will take time to recover fully,” said Nedbank.
Automotive Business Council CEO Mikel Mabasa said on Thursday the market was unlikely to recover to 2019 levels until at least 2023. Some other analysts who previously agreed now say it could take one to two more years. No-one is betting when it will return to 2013 record levels, when the market hit 649,217. This was down to 536,612 in 2019, then 380,206 in 2020. The business council thinks this will rise to about 438,000 this year, then 463,000 in 2022.
Of more immediate concern, said Mabasa, were “the persistent electricity supply disruptions, port delays and the third Covid-19 wave of infections. The third wave threatens to dent the momentum in consumption in the country, especially if level 4 lockdown restrictions are extended.”
WesBank marketing head Lebogang Gaoaketse said: “While the majority of sales during June were not severely impacted by Covid-19, we should expect a returned level of hesitancy in July.
“In 2019, the market was particularly volatile yet our trading conditions now are equally as unpredictable,” he said.
Export prospects are more encouraging. Having exported a record 631,921 vehicles in 2019, the motor industry saw the number tumble to 447,213 in 2020. So far this year, shipments are up 65.8% — from 108,945 to 180,585. In June, the industry exported 28,834 vehicles, which was 50.9% ahead of the previous June’s 18,808.
That growth was despite a dramatic drop in Mercedes-Benz C-Class exports after the local company stopped manufacturing the previous model in May. Having begun production of the new version last week, after a R10bn investment, exports will return to previous levels in the near future. More than 93% of SA-made C-Class cars are exported.
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