Johannesburg – The Covid-19 pandemic has had a major impact on consumer behaviour in the automotive industry, including the choice of vehicles, according to a study by professional services firm Deloitte.
The key findings of the study are that consumers are reconsidering their vehicle choices and purchasing plans as a likely result of the adverse economic environment due to the Covid-19 pandemic, while 40% of consumers stated that they were considering delaying the purchase of the next vehicle.
However, only 16% of consumers consider purchasing a cheaper, more fuel-efficient or smaller vehicle due to the impact of the pandemic. Martyn Davies, the MD of emerging markets & Africa at Deloitte, said more than half of consumers stated that receiving the lowest possible financing rate was the key factor when choosing a vehicle finance provider…
“In addition to consideration related to affordability, South African consumers look for a provider that offers convenience, an easy process and flexibility. These key factors suggest that South African consumers are price-conscious and many feel the economic impact of the Covid-19 pandemic,” Davies said.
The SA automotive industry contributes 6.4% to gross domestic product (GDP). Total automotive revenue in South Africa amounted to R500-billion in 2019. The industry is responsible for approximately 457 000 jobs across the South African economy’s formal sector.
New vehicle sales in South Africa have been under pressure for most of 2020 as consumers cut back on luxury spending. However, March vehicle sales show an industry on the rebound.
Total South African new vehicle sales increased by 31.8% in March, to 44 217 units, compared with the 33 546 vehicles sold in the same month last year. National Association of Automobile Manufacturers of South Africa CEO Mikel Mabasa said the turnaround in the new vehicle market has commenced.
“The industry is expected to start recapturing lost demand on its recovery path in 2021, considering the close correlation between new vehicle sales and the country’s anticipated annual GDP growth rate in excess of 3%.”
“However, structural constraints, which exist in the economy, coupled with the growing debt of the country and the ongoing electricity capacity limitations that business may be faced with in the future do not bode well for a quick recovery. New vehicle sales in 2021 may also be hampered by stock shortages of some models in the coming months caused by Covid-19-induced manufacturing supply chain disruptions, such as the current global shortage of semi-conductors, or computer chips.”