New-vehicle sales in South Africa are set to fall to the lowest in 17 years as the country faces its biggest economic contraction in almost nine decades due to the coronavirus pandemic.
The National Association of Automobile Manufacturers of South Africa cut its projection for domestic sales this year to 372,000 units, compared with 405,000 forecast in May, it said in a quarterly review. The downward revision assumes the economy will contract by 7.3%.
“New-vehicle sales are generally linked to the strength of the economy and for South Africa, the pandemic unfortunately deepened an existing economic recession,” Naamsa said. The number of new cars sold locally has fallen in five of the past six years as the economy failed to expand by more than 2% annually.
Sales fell by a record 63.4% in the second quarter compared with a year earlier, according to Naamsa. That was due to lockdown restrictions imposed from March 27 that forced dealerships to close their doors for five weeks.
“A recovery in the new-vehicle market will depend on how quickly the economy can break out of its low-growth trap and how soon society will recover from the present Covid-19 lockdown,” it said.
Production in Africa’s largest automaker is now projected to be even lower than previously forecast after the entire domestic industry suspended operations in April. At an estimated 435,500 units, output will be 31% lower than in 2019.
The association cut its export forecast 5% to 265,500 units, two-thirds of what it shipped last year. Before the pandemic shuttered borders and disrupted supply chains, car shipments were projected to reach a record high of 391,900 units in 2020.
© 2020 Bloomberg