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Vehicle Sales Slid In South Africa
May 09, 2007

Sales of new vehicles are sliding in South Africa, especially in the case of cars. The decline has been attributed to factors like higher interest and price hikes, apart from excessive holidays, e-NaTIS and high personal debt levels.

In South Africa there was a 4.4 percent decline in the sales of new vehicles to 43,588 units in April in comparison to the same month the previous year. This was revealed in the news on MoneyWeb by the National Association of Automobile Manufacturers (NAAMSA) on May 3, 2007.

April’s total vehicle sales of 48, 523 included sales from Associated Motor Holdings, which was the first time since 2007 that the data was incorporated. The most adverse impact was on car sales with a fall of 15.9 percent compared to the corresponding period in previous year, which registered sales of 30,827 new cars. In contrast in April 2007 new car sales amounted to 25,912.

At 13, 289 units, even the aggregate for new vehicle export sales experienced a decline of 1,542 vehicles or 10.4% compared to the 14,831 vehicles exported during the same month the previous year.

NAAMSA observed that consolidation continued for the new vehicle market as passenger car sales dropped drastically owing to higher interest rates and recent car price increases. The cause of the slow down is believed to be the numerous public holidays and extended school holidays during April but mainly the problems resulting from the new e-NaTIS electronic new vehicle registration system. In addition to these factors was the continuation of high levels of personal debt that took its toll on consumer spending and new car purchases.

The entry of e-NaTIS has had a negative impact on the industry as a whole and in particular on the franchise dealers with cash flow problems and extra interest charges. Nevertheless where vehicle manufacturers and importers are concerned, the impact was felt more or less equally across all brands in the new vehicle market.

The view of a research analyst at
RNCOS is that while in South Africa, the automotive industry is important for fueling growth, there are specific hurdles to be overcome due to the small home market and overseas competition. The most urgent requirement for automotive manufacturers is to collaborate with suppliers and dealer networks to lower costs, improve efficiency and therefore ensure superior service to customers. This urgency is even more pronounced for local manufacturers due to the fairly small size of the South African market with exports curtailed by protective tariffs and stronger Rand.

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