New car sales in South Africa show the economic impact of the lockdown

The National Association of Automobile Manufacturers of South Africa (NAAMSA) has released the new vehicle sales statistics for May 2020, which are 68% lower than May 2019.

The automotive industry contributes 6.4% to South Africa’s GDP – 4.0% in manufacturing and 2.4% in retail.

It accounts for 27.6% of the country’s manufacturing output and is responsible for approximately 457,000 jobs across the South African economy’s formal sector.

This means the automotive industry and new car sales are important economic indicators of the health of the economy.

In May 2020, 12,932 new vehicles were sold in South Africa, which represents a substantial decline of 27,496 units from the 40,428 vehicles sold in May 2019.

Export sales, at 10,819 units, also registered a big fall of 19,333 units or a decline of 64.1% compared to the 30,152 vehicles exported in May last year.

The total reported industry sales of 12,932 vehicles can be broken down as follows:

  • 87.3% dealer sales.
  • 7.9% sales to government.
  • 2,9% to industry corporate fleets.
  • 1,9% sales to the vehicle rental industry.

NAAMSA said new vehicle sales for May 2020 reflect persistent demand weakness due to the impact of the COVID-19 pandemic as consumer and business sentiment remain severely depressed.

“The motor industry is currently experiencing unchartered conditions given the current unpredictability in these uncertain times,” NAAMSA said.

New vehicle sales are linked to the strength of the economy and the anticipated GDP contraction in South Africa does not bode well for the industry over the medium term.

“Under normal market circumstances positive indicators such as sharp petrol price decreases, substantial interest rate drops, below-inflation vehicle price increases, dealer incentives and low inflation would support the new vehicle market,” it said.

“However, how far these dynamics will move consumers and businesses into new vehicle purchases over the balance of the year remains unclear.”

It said the impact of COVID-19 on the new vehicle market and when the level of factory output will return to where it was before the lockdown will only become clearer once the entire motor industry becomes fully operational and prepares itself for the “new normal”.

The chart below shows the impact of the lockdown on new vehicle sales in South Africa.

Now read: Car sales in South Africa down 68% in May

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New car sales in South Africa show the economic impact of the lockdown