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New Vehicle Sales in South Africa Slumped 13.3% in April 2008
Jun 19, 2008

South African auto industry experienced 13.3% month-on-month decline in April 2008 due to high interest rates, inflation and increasing fuel prices.

Figures released by the National Association of Automobile Manufacturers of South Africa (Naamsa) on May 6, 2008 for the sales of new vehicles during April 2008 showed a decline of 13.3% from the previous month, as reported by

Naamsa disclosed that the new vehicle sales in April 2008 plunged 2.8% at 42,359 Units, which was 1,204 Units less from 43,563 Units sold in April last year. Moreover, the new cars sold in April 2008 were 3,696 Units lesser from the total sales of 27,790 Units in March 2008.

High fuel prices are mainly responsible for decline in new vehicle sales in South Africa in April 2008. Customers refrained themselves from buying new vehicles as they did not want to expend on traveling. Moreover, owing to higher borrowing cost, consumers stayed away from purchasing new vehicles and as a result, new vehicle sales dipped in April 2008.

Moreover, inflation and interest rates also led to a slump in new vehicle sales in April 2008 because customers were waiting for reduction in interest rates. High interest rates made financing of new vehicles difficult and there was an intense pressure on consumers’ disposable income because of continuously climbing food, energy and fuel prices. It affected the business confidence and consumer sentiment negatively in the South African automobile industry.

The trend of decline in new vehicles sales will continue to haunt the South African automobile industry in rest of the year also. The Light Commercial Vehicle (LCV) and new domestic car segments are anticipated to remain under pressure in future. The cumulative pressure of spiraling inflation, high fuel and food prices, rising household debts and economic recession will further slowdown the vehicle sales in South African automobile industry.

According to a Research Analyst at
RNCOS, “Rising fuel and food prices, unemployment and inflation are together making buying new vehicles more difficult for consumers. In order to increase the automobile sales, the auto industry has to take some corrective steps. Players, particularly auto-dealers, take a stock of their current policies and formulate new to encourage customers to buy automobiles.”

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