Thu, 01 Oct 2020

The July 2020 new passenger car market registered a substantial decline of 35.8% to 18 905 units compared to the 29 457 new cars sold in July last year.The contribution by the car rental industry comprised only 1.4% in July 2020.Vehicle exports for July 2020 recorded a decline of 29.6% compared to July 2019.

The July 2020 new passenger car market had registered a substantial decline of 10 552 cars or a fall of 35.8% to 18 905 units compared to the 29 457 new cars sold in July last year, the National Association of Automobile Manufacturers of South Africa (NAAMSA), said on Monday.

With the tourism sector still under lockdown restrictions, the contribution by the car rental industry comprised only 1.4% in July 2020 compared to the nearly 20% in July 2019, NAAMSA said in a statement.

Domestic sales of new light commercial vehicles, bakkies and mini-buses at 11 123 units during July had recorded a decline of 2 736 units or a fall of 19.7% from the 13 859 light commercial vehicles sold during the corresponding month last year.

Out of the total reported industry sales of 32 396 vehicles, an estimated 30 325 units or 93.6% represented dealer sales, 3.1% to industry corporate fleets, 2.9% sales to government, and an estimated 0.4% represented sales to the vehicle rental industry.

Vehicle exports for July 2020 recorded a decline of 10 381 vehicles or 29.6% compared to the 35 087 vehicles exported in July 2019. The performance for July 2020 did reflect an improvement on June 2020 as the domestic automotive industry's major export destinations are starting to ease their lockdown restrictions with many actively stimulating their new vehicle markets with large financial government incentives.

According to Nedbank's Economic Unit, commented that export volumes rose strongly over the month, perhaps signalling the clearing of backlogs reported over June, but remained below the volumes achieved in 2019.

The unit pointed out that NAAMSA estimates that, based on current expected GDP contraction of over 6% in 2020, vehicle volumes will be down by at least 30% for the year.

"The strong increase in exports over the month was encouraging, but the sector will not return to the strong performance seen over 2018 and 2019 until economic conditions in key markets - Europe and Asia - return to normal," the unit said in a statement.

Investec economist Lara Hodes says the passenger category makes up the majority of the new vehicles sold and its sales falling by a further 35.8% y/y reflects the muted domestic demand environment.

Additionally, sales of light and medium commercial vehicles fell - although at a slower pace - by 19.7% y/y and 12.9% y/y respectively in July, while the heavy commercial category saw sales slide by 13.2% y/y.

"The projected steep contraction in GDP for 2020 of 10.1% y/y, coupled with subdued business confidence, which plunged to an all-time low in the second quarter of 2020 is likely to hinder substantial growth in commercial vehicle activity in the near-term," says Hodes.

"Supply side disruptions remain, while global demand is still subdued. Furthermore, second waves of infection being observed in many countries could impede the pace of recovery."

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