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Short-Term Attitude For The New Vehicle Market Not Ideal: NAAMSA
Jun 13, 2007

There is no doubt that higher and projected inflation data in addition to poor trade deficit and the growth of credit extension to the private sector would have a significant bearing in slowing down new car sales in South Africa.

As per the news published on
Fin24, sales of new vehicle in South Africa are continued the trend of consolidation last month as well. NAAMSA (National Association of Automobile Manufacturers of South Africa) has come up with the finding that large chunk of sales recorded in commercial-vehicle segments.

NAAMSA also pinpointed the fact that the short-term attitude for the new vehicle market is not an ideal thing to be done. The pivotal factor here is that passenger-car sales demonstrated declined during the month of May. The main responsible for this is the increase in interest rates in previous year; inflation of new-car price and last but surely not the least high levels of personal debt.

Theoretically speaking, the automotive sector is quite a prominent growth driver in South Africa, but at present it is facing the heat because of the small domestic market and overseas competition. The need of the hour is that automotive manufacturers work in partnership with suppliers and dealer networks to minimize costs, enhance efficiency, and ultimately offer top-notch service to clients.

In terms of statistic, aggregate new sales last month of 51,683 registered a decline of 891 units (or 1.7%) compared with the 52,574 new vehicles sold in May 2006. There are various factors leading to this slowdown. The main factor is the increasing prices of new vehicles because of a weaker rate of exchange and the pervasive threat of increase in interest rate.

Experts believe, the unexpectedly record sales of cars in last few years have also played a significant role in slowing down the car sale.

As per a research analyst at
RNCOS, “The automotive industry in South Africa, after experiencing cash flow issues as well as high interest charges, had been hampered quite badly by the introduction of e-NaTIS.”

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