Buying and selling cars during COVID-19 in Botswana

Despite being still on a raise, the Botswana car market has been slowing down in the last few years even without almost the whole world going on lockdown due to global pandemic. This year wasn’t expected to be good for car sellers anyway, and now it's quite clear that it's going to be probably the worst time ever for the vehicle industry with drastic decline in car sales. 

After fast raise during 2015 and 2016, in 2017 the Botswana car industry had a record year with sales surpassing 8100 units of new passenger cars and commercial vehicles altogether. Around 3500 units out of that total number were passenger cars. One year later this number had fallen to 1400 in 2018 and dropped further to 1050 cars sold in 2019 according to the World Motor Vehicle Sales report by the International Organization of Motor Vehicle Manufacturers. 

As of April this year, according to preliminary data, the total number of reported car sales was down by 0.6% compared to the same time last year, and although latest data are not reported yet due to people not attending to work during the lockdown, based on our own observation of car market players activity on AutoGuide.co.bw, we can say that sales only further declined. It happened naturally during April to June period when the entire country went on lockdown and basically stopped all business activity, and just when more potential buyers started web surfing for a car to buy while dealers began to upload new stock available during July, on the 30th of July the country's authorities announced another lockdown of greater Gaborone zone, which is where over 60% of vehicle sales happen.  

In addition, besides the fact that vehicle production and imports basically paused all over the continent, and new arrivals are seriously delayed, both car sellers and buyers are facing major obstacles with getting financing. With low to no turnover for car dealers they suffer lack of funds to purchase some stock, and with businesses going like that banks are not eager to provide financing easily. 

Individual buyers, on the other hand, face a similar situation with getting bank loans to purchase a car, no matter whether they want to buy a new or pre-owned car bank loan approvals drastically dropped, and with 80% to 90% of car purchases being made with credit funds it further influences the market greatly. 

For dealers to survive in the current market, whether they are selling new or second-hand cars, they need to tailor their prices for what people can afford, which basically means cutting their margin and sometimes even working with zero profit just to last long enough until the situation improves. Car buyers, in their turn, might have to settle for less than would normally be the case when trading in their current vehicle. 

It is important to keep the market from total crashing in case all parties don’t want to go back to a time when cars were luxury items for society’s elite and not just a means of transport for anyone. Car industry, just like others, runs on supply-and-demand principles. If people stop buying cars, dealers won’t be able to offer good deals on trade-ins, which makes it more difficult to sell one’s current car or buy another one. Thus, it is imperative for sellers and buyers to support one another through these trying times. After all, nothing lasts forever, and there definitely will come a time when car sales go up again contributing to the rise of the country's economy in general, we only need to be patient to see it.

Published on 05.08.2020 by AutoGuide.co.bw

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