Rand fluctuations, unstable fuel prices, the inevitable rise of utility costs and the high number of unemployment currently in South Africa continue to have an impact on why affordability continues to remain the number one factor influencing new car purchases in majority of South African households.
With that said, South African new car sales are set to take a plunge by 3.5% in 2020 as most vehicle owners plan to hold on to their cars just a little bit longer in the current challenging economic conditions.
Wesbank Chief Executive Chris De Kock has mentioned that 2020 is expected to be a challenging year for the motoring industry. This prediction is fueled by a low demand from both the retail and corporate industry. In the short term this could drive the trend of consumers opting for entry level or cheaper derivatives which would then in turn continue to create a demand for used cars.
It is a relief to know that South Africa is not the only country facing this predicament. The sale of vehicles has taken a significant fall globally too. And is expected to continue in 2020. This comes after almost a decade of growth since the financial crisis. This only reflects more on the pressure of the global economy.
A 3.5% decline would mean a total reduction of 18 626 sales across all categories. This decline is expected to come from passenger vehicles and light commercial vehicles.
The Automobile Association conducted research early 2019 which looked at how economic factors in the country played a significant role in car ownership in the country. Over 60% of South Africans said that they were keeping their cars for more than 5 years. Moreover, 40% said they were keeping their cars for five to ten years and an additional 35% said they were keeping their vehicles for more that 10 years.
Besides economic reasons, a percentage of the people who responded to the research had stated that the were keeping their cars longer because they found that the newer model cars were more reliable. Newer vehicles provide reliable and practical motoring to our nation’s public compared to the older models. This in turn prevents vehicle owners from taking the hasty decision of buying a brand-new car.
There seems to be a couple of reasons (the current economic situation in South Africa being one of them) that contribute to the drop in vehicle sales. Motorists are keeping their cars for longer due to either not being able to afford a new car or because their current cars are not giving them any issues. In either case, South Africans holding on to their cars for longer periods makes it necessary for them to have reliable insurance and maintenance plans.
By Noni Nchwe