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Supergroup: SA car market in gear to sell cars again
COVID-19 lock-downs have put the brakes on the global car market, with new vehicle sales in South Africa skidding to a virtual standstill in April. Under the relaxed level 4 lock-down, the local car market has reopened but there are still uncertainties around whether new cars can be sold. Peter Mountford, CEO of Super Group joins CNBC Africa for more.
Sat, 09 May 2020 03:26:27 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Car sales in South Africa came to a halt in April, with uncertainties remaining as the market partially reopens under level four lockdown.
- Dealerships face challenges with testing and registering vehicles, leading to significant revenue losses and economic strain.
- The contrasting situations between the UK and South Africa indicate a more buoyant outlook for the UK market post-lockdown, driven by government support and economic factors.
The COVID-19 lockdowns have taken a toll on the global car market, with new car sales in South Africa coming to a virtual standstill in April. While the country has partially reopened its car market under the relaxed level four lockdown, uncertainties loom over whether new cars can be sold. Peter Mountford, the CEO of Supergroup, which operates car dealerships in both South Africa and the UK, shed some light on the impact of the lockdown on the automotive industry. In level five, car dealerships were completely shut down, except for emergency services for essential vehicles. Moving into level four, dealerships can now conduct emergency service work on vehicles and limited vehicle sales with strict adherence to hygiene protocols. However, the challenge lies in testing and registering vehicles, as registering stations and licensing departments have been slow to reopen. This has placed new vehicle dealerships under significant pressure. Prior to the pandemic, the South African car market was already facing challenges due to a decrease in consumer spending power. With many people on unpaid leave or having lost their jobs, purchasing a new car is not a top priority for consumers. In March, new vehicle sales were down by four percent compared to the previous year, and during the lockdown, sales plummeted by over 98 percent year-on-year. The cost of maintaining stock, along with expenses like rent, utilities, and wages, has strained dealerships, leading to substantial losses in revenue. Looking ahead, Mountford acknowledges the tough road ahead for car sales. While the weakening exchange rate may make locally manufactured cars more affordable, the economic pressure on consumers remains a significant obstacle. Despite the challenges, there is an opportunity for consumers to find value in the market due to the excess stock and potential price adjustments in response to the exchange rate volatility. In April, there were still some car sales, primarily to emergency service providers. These vehicles had already been in the system prior to the lockdown and were critical for essential services. As Supergroup also operates in the UK, Mountford highlighted the contrasting situations between the UK and South Africa. The UK government's furlough scheme, which provides basic remuneration for individuals in lockdown, has offered some relief to businesses. With plans to ease the lockdown restrictions from May 11th, the UK market is expected to rebound faster than South Africa's. The UK's wealthier economy and a more robust support system for businesses and individuals are likely to contribute to a quicker recovery in vehicle sales compared to the challenges faced in South Africa. Overall, the uncertainty surrounding the car market in South Africa, compounded by economic hardships and regulatory restrictions, presents a complex landscape for dealerships and consumers alike.
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