From Car Buying to Electric Cars | AutoTrader exposes data

Car buying search behaviour has show a total of 401 million online searches for used cars (including electric cars) has took place last year (an all-time record and a 40% increase year-on-year). In addition, the average selling price of a used car in the last year was R289 312, an increase of R9 003 from the previous year, but electric vehicles are still out of reach. These are amongst the key findings contained in the latest 2020 AutoTrader Car Industry Report – for the year ending June 2020.

This annual report incorporates the new car taxonomy and vastly improved search capabilities – providing unprecedented insight into the automotive industry and the engagement of car buyers.

There’s a special New Car feature from Mike Mabasa, NAAMSA CEO, highlighting important aspect of the New Car market.

The report provides insights into which makes, models and – for the first time in South Africa – which variants (including trim levels) are important to car-buying consumers.

Lastly, fascinating findings on the impact of Covid-19 on the automotive retail market.

Demand for Electric Vehicles (EV’s) continues to grow

The demand for Electric Vehicles (EV’s) continues to grow with many South Africans still eyeing either electric cars or a hybrid. The top three most searched for electric cars are the BMW i3, BMW 3 Series and Jaguar I-Pace. Interesting though, that there are searches for the electric BMW 3 Series when it’s not an available Electric Vehicle. An indication that car buyers are not fully informed on electric cars yet.

Spy photographs of the new electric BMW 3 Series have been widely published – meaning an electric derivative of this popular sedan could make its way to South Africa one day.

When it comes to hybrids, the most searched for model is the Volvo XC90, which is searched for far more often than the second and third-placed models:

Toyota Yaris
followed by the BMW 3 Series.

Neither the Toyota Yaris nor the BMW 3 Series is available in the hybrid guise.

However, in South Africa we’re a long way off the adoption of electric vehicles, not because we don’t want to own electric vehicles, it’s more about the affordability of electric cars. High import duties as well as the lack of government subsidies, make electric cars quite pricey in South Africa, placing them out of the reach of many South Africans.

Retail Price Index confirms turbulent times for automotive retail

We’ve seen that reports of this kind are particularly useful during turbulent trading conditions – because the data helps dealers to acquire stock at the right price that meets consumer demand. It also helps car dealerships re-price often.

It goes without saying that 2020 has probably been one of the most challenging years in the history of the automotive market in South Africa; we have been on a rollercoaster ride. Our Retail Price Index has confirmed this:

In Q3, ending September 2019, we saw prices rise to a high of 2.4% year-on-year
and then it sank to a price deflation low of -0,9% year-on-year in Q1 ending March 2020.

Car buyers are still passionate about German and Japanese vehicles

Irrespective of whether one studies the statistics around brands, models or variants, there is one consistent theme: South Africans want to own vehicles that are produced by German or Japanese automotive companies.

It’s interesting to see that the top three brands are from German OEMs:

12,2% of all brand searches (48,9 million) were for BMW, Mercedes-Benz and has continued to grow.
Second, with 11,31% (45,44 million) of total brand searches.
And Volkswagen third with 11,30% (45,37 million searches).

Variant and equipment level search data is unique to AutoTrader and a first in South Africa.

The variant scorecard and consumer vote went to:

The iconic hatchback, Volkswagen Golf GTI, which came first (1,5 million or 0,4% of searches).
Another Volkswagen model – Polo GTI came second at 0,3% (1,4 million) of all variant searches.
In third place was the Mercedes-Benz C-Class C63 AMG with 0,27% (1,1 million) of all variant searches. It was interesting to see this upmarket and premium car move from sixth place in the previous report.

Impact of COVID-19 on automotive

COVID-19 has had a global impact on all markets and industries; with automotive contributing 6.9% to South Africa’s GDP (with automotive retail contributing 2.5% to GDP and manufacture contributing 4.4%), this is the perfect opportunity to future-proof our businesses. The lockdown, as a result of the virus, has led to further pressure on an already negative economic environment coming into 2020.

But, on a positive note, this has been a catalyst for something I am passionate about: Automotive Digital Retailing.

Monthly Used Car Price Inflation pre-lockdown for the Quarter ending March 2020 was volatile as South Africa found itself facing economic headwinds. Lockdown saw prices plummet by -4,1% YoY in May 2020 as the market returned from April’s shutdown and then increased by 1,2% YoY in June 2020 as the market opened and demand began to increase.

July 2019 to March 2020, recorded a YoY increase of 33% in car buyer searches vs 2018. In comparison, April 2020 to June 2020 saw a YoY increase of 55%. During the lockdown, consumer search behaviour changed almost immediately, showing that consumers will always change and adapt their behaviour to suit their current environment. In fact, the most searched for car models during lockdown were considerably different from the full 12 – month results in this report. The most searched for model during the lockdown period to date and at the time of writing this report, was the Volkswagen Golf. The Porsche 911 grew in popularity entering the top 10 and knocking out the Audi A3. The top 10 most searched for models also lost overall share of search, indicating that car buyers considered a wider range of vehicles.

This year’s AutoTrader Annual Industry Report has given me a chance to reflect on the momentous year that has been, and in turn, to look ahead. I see a bright future and I find myself mulling over three key areas: