South Africa's National Automobile Dealers' Association (NADA) said February sales were more encouraging than had been expected.

"Overall, dealer sales across all segments increased by almost 3,000 units month on month," NADA chairman Mark Dommisse told bizcommunity.com. "It was heartening to see that passenger vehicle sales increased by almost 1,500 units and light commercial vehicle sales improved by close to 2,000 units.

"A slow start to the year had been expected, as the coronavirus and sluggish local economy have had a negative effect on consumer and business confidence. But February sales figures proved better than we, as the dealer body, had anticipated.

"Unfortunately, consumers have been hit with a double whammy in the past week with the announcement of an upcoming electricity hike of 15.6% in April and another big increase in the price of fuel from Wednesday. These are expected to have a negative effect on the market going forward. Some new vehicle dealers are also experiencing a tough time with stock shortages on certain models," added Dommisse.

The report said the current supply situation is due to a global shortage of semiconductors, commonly known as computer chips, which are used in increasingly greater numbers in modern vehicles.

"Chips are not only used extensively in the automotive industry but in smartphones and gaming consoles as well. Orders for chips were reduced due to the pandemic and now the chip manufacturers are unable to catch up on the backlog, as demand far outstrips supply," said Dommisse.

"Some forecasters see the global automotive industry losing up to a million vehicles and huge amounts of money this year as production is reduced. We expect this situation to last as long as four months."

According to bizcommunity.com, the South African automotive industry faces a challenging 2021, with new vehicle prices continuing to climb well above the inflation rate in a market already severely constrained by the financial effects of the COVID-19 pandemic.

The total new vehicle market for February was 37,521 vehicles which was 13.3% lower than the 43,296 units sold in the same month last year. Dealers performed well in the retail segment with an 84.3% share of the total market, with rental taking 10%, government 3.4% and sales to corporate fleets 2.3%.

Exports held up reasonably well, with 29,582 units shipped, which was only 8% below the figure for February 2020, just before COVID-19 hit.

"It is encouraging to see the coronavirus vaccine availability and innoculation rate moving up, but there is a long road to travel before we can reach the required herd immunity which should bring back some normality to the way we do business," the NADA chairman added.