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South African Vehicle Sales Fell in October
Dec 13, 2007

As per NAAMSA, the new vehicle sales in South Africa recorded a YOY growth of 5.9% in October 2007, with high interest rates influencing the demand.

The sales of new vehicles in South Africa declined by 5.9% YoY to 54,387 units during October 2007 with higher rates of interest impacting the demand, the National Association of Automobile Manufacturers (NAAMSA) stated, according to news published by Reuters.

As per NAAMSA, the total sales during October 2007 stood at 59,914 vehicles that included sales by Associated Motor Holdings, included for first time in 2007.

The sale of automobiles has continued to decline as the recent report on motor alert of the Standard Bank notified the Reserve Bank’s decision to regulate the fiscal policy for record seventh time in a row, taking the prime to 14%, has led to a slump in sales during October 2007, as per the news published by Thetimes.

The experts of the industry consider that the strict monetary policies have led to the situation of inflation and strong consumer spending that forced the automobile industry on its back foot. Moreover, the trading circumstances, mainly in the market of new passenger cars, have weakened considerably in recent past.

The overseas investors have also shown no concern for investment in the automobile industry. Foreign investors, who were earlier making investments in the automobile market of South Africa, are withdrawing their investments by watching the incessant decline in the interest of the buyers.

Moreover, the rising repayment of home loans and domestic expenses, several people are finding it tough to make their vehicle reimbursements. The rapid hike in the price of fuels has also discouraged the consumers for purchasing the vehicles.

In its recent quarterly assessment, NAAMSA said that automobile manufacturing industry is likely to see pressure during the year 2008 on account of the elevated interest rates along with new preventive legislation over lending, along with other factors, as reported by Reuters.

A Senior Research Analyst at RNCOS says, “The rigid banking policies have pushed the South African automobile industry on the edge of the cliff. The dealers of automobile are pushing the banks to mitigate their lending guidelines, but the banks are not affected by such appeals and are backing their decision by announcing further hikes. To safeguard the automobile industry, the automobile dealers need to take alternate steps. They will have to allure the customers by introducing a few eye-catching models of the automobiles completed with latest technologies”.

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