The onset of the coronavirus pandemic in 2020 was like a haymaker to the jaw – no one saw it coming and its reverberating effects was devastating. South Africa was immediately placed under a hard lockdown and with little to no financial flow, many businesses were forced to close their doors and people lost their jobs.
Some resorted to immediate cost-cutting methods like trading in their current set of wheels for something cheaper and cancelling car insurance. If the belt was tight enough already, extra holes had to be punched to make even more room.
The automotive sector, that contributes roughly 6.9% to the country’s GDP – took heavy blows as a result of the global chip shortage that continues to delay the production of many new models. In addition, people could no longer go out and buy vehicles as they normally would because of the tight-fisted social restrictions. Many automakers adopted the approach of setting up virtual showrooms that allowed potential customers to experience buying a brand-new car from home.
The most significant risk to the industry at this point is the announcement of any further lockdown level increases that will undoubtedly throw a critical spanner in the works once again – something the industry can ill afford. Most companies adopted work from home arrangements and this translated into people not needing to drive around much with less money spent on servicing, repairs or panel beating – which meant considerably less work for workshops.
Where job security is concerned, not everyone is completely out of the woods and remain highly sceptical of committing to buying a new car with a term of five years or more because things can change virtually overnight. This means that keeping the faith with the current ‘skadonk’ or dipping into the used car market is becoming the preferred option for many.
South Africa’s automotive market is still on the mend and will take some time before things return to the straight and narrow.