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Hitting the brakes: New car sales slow down in June as...

Business Maverick


Hitting the brakes: New car sales slow down in June as consumers curb spending

A general view of a Hyundai Car Dealership on August 18, 2020 in Johannesburg, South Africa. (Photo: Gallo Images/Luba Lesolle)

South Africa’s new car sales dipped in June to 38,030 from 38,337 in May, according to motor industry body Naamsa. This shows a sticky consumer bounce-back in the second half of 2021 as the exuberance of earlier this year gave way to concerns about tighter lockdown restrictions.

Car sales were smashed in 2020 after the government imposed a strict Covid-19 lockdown in late March, banning most consumer purchases with the exception of essential items. Car sales, a key measure of consumer confidence as well as export performance, recovered towards the end of last year and into 2021, though, predictably, they remain well below the levels seen before pandemic struck.

“We expected vehicle sales to creep closer to 2019 levels, but the June figure diverged quite strongly,” said Pieter du Preez, an analyst at NKC African Economics in a note. He said the slowdown in car manufacturing was partly due to the global shortage of semiconductors due to plant closures in the US and parts of Asia. Du Preez, however, added that the drop in local sales was concerning.  

The month-on-month fall reveals many South African are unable, or are not ready, to spend big money on long-term assets, something that has been reflected in other indicators released recently which show commercial banks are not gung-ho about granting credit, and that consumers faced with falling wages, an uncertain economic outlook and slow access to vaccines, would rather wait and see.

In a press release, Naamsa said the rate of recovery for industry remained uncertain and may only be achieved by 2023, adding that sales were down close to 12% compared with the first six months of 2019. 

Of concern are the persistent electricity supply disruptions, port delays, and the third Covid-19 wave of infections being experienced,” the motor industry body said. 

“The vaccine roll-out is slow and a third wave threatens to dent the momentum in consumption in the country, especially if the adjusted alert Level 4 lockdown restrictions are extended for longer than the initial two-week period.” DM/BM


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