The financial well-being of a whopping 65% of vehicle-buying consumers in South Africa has been negatively impacted by the nationwide lockdown. Many (30% to be precise) are under pressure to replace their vehicle within the next four weeks. This is compelling evidence in favour of allowing all vehicle dealerships – both independent and franchised – to trade under Level Four of lockdown restrictions.
This is according to George Mienie, CEO of AutoTrader, who points out that, as consumers lose their jobs and/or receive salary cuts, they are demonstrating an urgent need to free up cash or reduce monthly household costs. “Searches for second-hand vehicles under R50 000 have increased by almost 300% versus normal pre-lockdown levels,” he reveals. “Clearly, South Africans are worried about how they will feed their families.”
As the country’s largest motoring marketplace, car searches and sales via AutoTrader have long been regarded as an accurate barometer of consumer buying patterns and, as Mienie explains, motorists (including higher income level consumers) are trading down in all categories.
Anecdotal feedback from dealers trading on AutoTrader reveals that motorists are trading down from a BMW X5 50D (R730 000) to a BMW 520d (R500 000). They are trading down from a Mercedes-Benz ML63 (R670 000) to a Mercedes-Benz C180 (R300 000). And they are trading down from a Ford Ranger (R335 000) to a Nissan NP200 (R160 000).
The website has, however, also run a survey during the first week of May 2020 in order to establish specific lockdown buying patterns. “We have established that 30% of consumers indicate that they are under pressure to replace their vehicle within the next four weeks. This pipeline needs to be managed to avoid a further financial impact on both consumers and car dealers. The sooner consumers are allowed to trade with vehicle dealerships, the sooner their family’s financial pressures may be eased,” he stresses. Mienie also notes that consumers expected dealerships to be open and trading on Monday 4 May, as evidenced in the sharp increase in website traffic that day. “Enquiries to vehicle dealerships have increased by more than 150% compared to pre-lockdown levels,” he notes.
Mienie says that it is therefore in the best interests of the South African consumer that all vehicle dealerships be allowed to trade under Level 4 and that “specific directions” be communicated by government as a matter of urgency so that dealerships are allowed to open their doors.
“It’s vital for the government to include independent dealerships since they dwarf franchised car dealerships in number in South Africa. These (the independent) outlets mostly fall into the small to medium enterprise category, which is arguably the sector currently most at risk. Furthermore, used car sales outnumber new car sales in South Africa by a factor of 2:1,” he points out.
Mienie notes that all the supporting infrastructure needs to operate too. “For the proper functioning of the supply chain for vehicle sales, licence departments, testing stations and roadworthy centres should open alongside vehicle dealerships in order to facilitate the transfer of ownership from dealerships to the buyer during Level Four,” he notes.
Assuming that careful controls and common sense prevail, Mienie says that allowing all vehicle dealerships to trade under Level Four of lockdown restrictions would not endanger motorists. “We need to step up and help consumers sell their vehicles. If protocols at dealerships are implemented in a controlled fashion, the risk of infection is low compared to shopping centres,” he concludes.