The sales of new models of passenger cars remained slow in April 2007 in South Africa as the interest rates have been hiked by government and the demand has decreased.
South Africa's automakers recorded sales of 43,588 units - down by 4.4% or 2,002 units of novel automobile judge against 45,590 units in April last year, statistics of the National Association of Automobile Manufacturers of South Africa's (NAAMSA's) reveals. The automobile manufacturers' spokesperson stated that as anticipated, the increase in public holiday and particularly the e-NaTIS new automobile registration issues had contributed to decrease in 2007, April vehicle sales, in news published on Business Report.
“The continued slowdown in consumer spending can be attributed to pressure on private buyers to curb spending and also to the January new car price increases. On the other hand, business sector spending remains healthy and we can expect light commercial vehicle sales to continue to make a positive contribution to the overall market in the months ahead,” said Roel de Vries, sales and marketing director of Nissan SA, in news published on Biz Community.
As a consequence of increased interest rate and raised vehicle prices, sales of passenger car are constantly falling. The central bank increased interest rates by 2% amid June and December previous year to control mounting pressure of inflation and elevated consumer expenses. It informed buyers about increasing level of debt and advised them to lessen their expenses, however it left its repo rate at 9% in February and April. Sales of new passenger cars decreased in country as the car dealers had cash flow troubles due to their paying interest charges on cars on their trading floors.
Sharp decline in car sales was somewhat expected by the dealers as April, conventionally, is low month due to long weekends, which happen during this month, and hence market was anticipated to be down by 16 percent from April. Besides, school vacations were extended. All these aspects collectively played a major role in reduced number of sales in April.
“All these causes determine the sluggishness in the demand part of economy extending through the rest of 2007. Moreover requirement of new cars will, in addition, be crashed by elevated new car prices with new car price further increasing,” said the research analyst at RNCOS.
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