Reverse gear: South Africa’s new car sales in 2020 at 20-year low

In 2020, 380,449 new cars were sold in South Africa, according to the National Association of Automobile Manufacturers of South Africa (Naamsa). That was a 29.1% decline from the sales figures for 2019, which comes as no surprise in the wake of the economic train smash caused by the pandemic and the lockdown measures to contain it. 

The really jarring stat was the fact that it is the same number of cars that were sold 20 years ago. That leaves a lot of road to make up.

Reverse gear was engaged across the board. Car sales were down 30.6% in 2020, light commercial vehicle sales 27.6%, the medium commercial versions 22.5%, and sales of heavy trucks and buses declined by 17.2%.

“The significant fall in aggregate new vehicle sales occurred despite a 300 basis point interest rate cut during the year to a near 50-year low. South Africa entered a recession before the outbreak of Covid-19, which means middle-class disposable income was already under pressure prior to the national lockdown,” Naamsa noted.

That is a telling point. Credit has never been cheaper for much of South Africa’s population, yet new vehicle sales could hardly gain traction. One key factor here is confidence, and for consumers this was absolutely shattered last year, and remains fragile, to say the least.

Looking ahead in 2021, Naamsa sees sales pulling out of reverse, but does not expect them to go beyond third gear. New vehicle sales for this year are seen rising by 15%, which would still be well below 2019 levels, and that forecast could get whittled down as growth prospects for 2021 dim amid the extension of the Level 3 lockdown. The retail segment of the auto industry in South Africa, according to Naamsa, accounts for about 2.4% of GDP. 

The road ahead is strewn with potholes. DM/BM