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South Africa?s New Vehicles? Sales Showed Poor Results for Sept
Nov 05, 2007

Car sales in South Africa showed poor result in September 2007 due to two weeks’ long strike in car parts’ sector, low business activity in September, strict credit-granting laws etc.

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n September 2007, the sales for new vehicles declined 13% in South Africa compared to September 2006. The decline was due to poor financial condition in September 2007, as per the recent statistics from South Africa’s NAAMSA (National Association of Automobile Manufacturers), Southafrica published this news.

Due to the private demand for the passenger cars, the new passenger car sales continued showing poor results in September 2007. As per NAAMSA, only around 50,084 vehicles were sold in September 2007 as compared to almost 57,599 cars sold in September 2006. The sale of new passenger cars declined by around 14% to 32,000 units against more than 37,000 units sold in September 2007.

The strike that lasted for two weeks in car parts section of the industry impacted the cars’ sales, according to some industry researcher. This affected the sales rate as the car manufacturers had to stop their production temporarily because of the car parts’ shortage. Other factors leading to the decline in car sales are low business activities and confidence in September 2007, increased interest rates, strict laws for credits-granting that begun in June 2007, and also reasonably high levels of debt of the consumers in South America, which weakened people’s urge to buy.

The London-based Africa’s Head of Regional Research at the Standard Chartered, Razia Khan, said, “Weakness in new vehicle sales is not exactly a new thing. (It) will not be enough, on its own, to stop the SARB (South African Reserve Bank) from tightening in October (2007)”, according to Engineeringnews.

As per NAAMSA, the country’s economic growth rate, the new vehicles’ price trends, and the interest rates would determine the performance of the industry for the remaining year. Reasonable consumer demands, developments in the infrastructure, and construction activities are expected to help the commercial car sector to grow.

According to a Senior Research Analyst at RNCOS, “South African auto industry is one of the world’s fastest growing industries. But September’s decreasing sales results have upset the auto dealers. However, the approaching Christmas season could prove advantageous for the auto dealers as the consumers always tend to spend on luxuries during this season”.

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