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New vehicle sales plummeted 98.2% in April, during a national blockade to curb the spread of Covid-19.
According to new vehicle sales statistics released by the National Association of Automobile Manufacturers in South Africa, only 574 vehicles were sold. Of these, 105 vehicles were passenger cars and 318 were light commercial vehicles. Across the industry, sales volume has fallen 32.1% for the year to date.
By comparison, total sales in March were 33,545. Naamsa reported that new vehicle sales for March decreased nearly 30% yoy. The association attributed the decline to challenging economic conditions at SAA, as well as developments related to Covid-19.
Naamsa members include automakers such as Toyota, Isuzu, Volkswagen, BMW, Ford, Nissan, and Mercedes-Benz.
“At this unprecedented time, the motor industry is experiencing unknown conditions and grappling with solutions to address it,” said Lebogang Gaoaketse, head of marketing and communications at WesBank, a vehicle and asset financier.
The automotive industry contributes 6.9% to GDP: 4.4% is attributed to manufacturing and 2.5% to retail trade. The industry represents 30.1% of the country’s manufacturing production and vehicle components are exported to 155 international markets, according to Naamsa. The manufacturing sector of industry employs more than 110,000 people and the sector as a whole supports 457,000 jobs, both directly and indirectly.
“The significant contribution of 6.9% by industry to GDP means that many jobs are potentially affected, both in manufacturing and retail, as well as foreign exchange earnings from exports.
“Mobility plays a vital role in providing the necessary stimulus for all sectors of the economy to move literally,” said Gaoaketse. “We should expect consumers to be slow in their return to the auto market as they adjust to social distancing measures and remain cautious about their own budgets given the uncertainty.”
The Treasury has projected that the economy could contract up to 16.1% due to the Covid-19 impact. Job losses could be between three and seven million, with manufacturing among the worst affected, Fin24 previously reported.
Previously, Absa reported that commercial activity in the manufacturing sector plummeted to a record low in April when manufacturing production halted due to the shutdown. Many of the respondents said that zero production took place during the shutdown. Overall, the Purchasing Manager Index decreased only moderately from 48.1 to 46.1. In April only the manufacture of essential goods was allowed, due to the blockade.
Investec economist Kamilla Kaplan said the April PMI suggested that the decline in real manufacturing output was stronger than that reported during the 2008/09 global financial crisis. “Lowering the level of blocking from five to four on May 1 will not offer much relief, as it still prevents much of the manufacturing sector from operating,” he said.
Kaplan had expected car sales to be close to zero due to the shutdown, and projected a decline of nearly 90%.
“The month of April generally sees a slowdown in sales growth due to public holidays and Easter. However, this is largely irrelevant in view of the total closure in April that saw the auto retail network close.” Kaplan said.
In a comment on the latest vehicle sales statistics, Nedbank said the prospects for new vehicle sales for the rest of the year had been “dimmed” by the effects of the Covid-19 pandemic.
