The South African automotive landscape – especially when it comes to consumer buying behaviour – has changed more in the last year than in the last few decades. Accordingly, the industry has had to adapt like never before in order to survive and prosper during this volatile time.
That’s according to George Mienie, AutoTrader CEO, who delivered the keynote address – titled #MobilityUnusual – at the recent HyperMobility virtual conference on November 18, 2020. The event took place with Messe Frankfurt South Africa and the National Association of Automobile Manufacturers of South Africa (naamsa), in association with AutoTrader, and its theme was “Navigating the turbulence together towards mobility 4.0”.
The lockdown is, of course, the reason for the dynamism of the South African motor industry (and indeed the world’s too). “This has been one of the most disruptive years in the history of the automotive industry, as lockdown has seen both production volumes and sales tumble. This is a global phenomenon; international industry analysis firm Counterpoint Research is predicting a global automotive sales outlook of around 72 million units for 2020, a 20.1% decline against 2019. In South Africa, the situation is similar – the used car market is estimated to have lost more than R16bn in sales as a result of lockdown in just three months versus 2019, representing a 56% decline in unit sales year-on-year (YoY),” reveals Mienie.
While sales volumes declined at the start of lockdown, an analysis of AutoTrader data revealed that consumer interest in buying a used car didn’t. AutoTrader is the largest digital automotive marketplace in South Africa. Accordingly, it provides unparalleled insight into car-buying patterns in the country.
Mienie reveals that the focus of the in-market car shopper simply shifted, if not, intensified. While the industry all but ground to a halt under Lockdown Level 5 (26 March to 30 April 2020) car shoppers seemingly became insomniacs – online car searches increased by a whopping 78% between 1am and 2am. Buying patterns were further altered under Level 4 (1 to 31 May 2020). “Faced with the economic challenges of lockdown, South Africans demonstrated their entrepreneurial spirit. Some people started sewing and selling masks, for instance. And, based on AutoTrader search statistics, others entered the delivery arena. There was a sharp increase in searches for both small and big vans during Level 4. It’s likely that South Africans saw the opportunity (or necessity) for a delivery offer,” he notes.
The need for financial survival was reflected both in Level 4 and at the start of Level 3 (1 June to 17 August 2020). “From 1 May to 7 June 2020, searches for second-hand cars under R50 000 increased by almost 300% versus normal pre–lockdown levels. It was clear that we were seeing the downtrading of cars, in a bid to protect finances,” says Mienie.
As Level 3 became the new norm, searches for cars R100k and less, or R200k and less, started becoming more popular again. “R100k searches increased by 22% and R200K searches increased by a whopping 51%. This was probably due to industries opening up and people going back to work under Lockdown Level 3. I believe this also accelerated the swing from new cars to used cars by consumers still under financial pressure,” Mienie postulates.
During Level 3, we also saw an emphasis on personal – as opposed to shared – mobility. “Before the lockdown, a Google Trend report showed YoY increases in searches for the keyword ‘Uber’ (serving as a proxy for the public’s growing demand for ride-hailing services). However, in July 2020, consumers pivoted to personal mobility, evident in consumer-related searches for AutoTrader outpacing Uber. To date, this is a trend that has continued – leading us to believe that consumers feel safer in their own cars,” notes Mienie.
The emphasis on personal mobility has also seen South Africans aged between 18 and 24 – commonly known as Generation Z – showing a new-found enthusiasm for learning to drive and owning a car. In fact, their interest in cars has tripled in South Africa since the start of lockdown (traffic by this demographic on AutoTrader has risen by 293% since the start of lockdown).
Level 3 (July specifically) also saw used car inventories – especially when it comes to “nearly new” cars (2019 year model) – increasing by a startling 32% in July 2020 compared to the previous month, placing buyers firmly in the pound seat.
Mienie says that, while the industry needs to remain cognisant of these trends, it should also not lose sight of a significant opportunity which could ensure sustainable growth, namely electric vehicles (EVs).
“We need to future proof our manufacturing capabilities for export to a European market that will one day soon no longer accept internal combustion engines. The 2020 South Africa EV Car Buyer Survey, conducted by AutoTrader and Generation.e reveals that 68% of South Africans are ‘likely’ or ‘very likely’ to consider purchasing an EV in the future. So, we also need to lobby the government to reduce import taxes to match those of internal combustion engines so that the industry can serve the growing demand for these vehicles,” he points out.
As the year moves to a close, Mienie says that he is pleased to see the market recovering – albeit slowly. “Sentiment within the automotive sector is the most positive that it’s been since prior to lockdown. New and used vehicle sales are picking up. Take Toyota, as an example. The company achieved its highest number of new passenger vehicle sales in October (5 755 units versus 4 610 in February 2020, which was previously its most successful passenger car trading month this year). While neither the new nor the used markets are trading at 2019 levels, this is positive news indeed – and a very good way to end what has been a challenging year,” concludes Mienie.