Blogs

Home | Blogs
South Africa Auto Industry Experiencing Decline in Sales
Dec 11, 2008

Sales of new vehicles in South Africa fell down in October 2008, following the increase in the price of new vehicles, inflation levels and shattering consumer confidence.

According to the National Association of Automobile Manufacturers of South Africa (Naamsa), sales of new vehicles declined in October 2008, as per the news published by bloomberg.

In October 2008, new auto sales came 30.1% down to 38,143 Units against 54,569 Units in October 2007. Since April 2007, there has been a constant monthly decline in vehicle sales, particularly the 30.7% fall recorded in August 2008 was the biggest fall since September 1994. Passenger car sales registered a 33.3% drop in on a YOY basis, whereas there was a decline of 23.4% in the purchase of LCVs like minivans and pick-up trucks.

The considerable decline in the South African automobile industry is credited to the daily sales rate slumped down to its almost lowest mark in five years in October this year. The above average increase in the cost of new vehicles in recent times and weakening consumer confidence globally has also adversely affected the automobile industry of the country.

Also, following the central bank’s initiatives to increase the benchmark interest rate since 2007, the consumer spending has slumped down considerably. Consumer spending accounts for two-thirds of the expenditure in the country.

From the perspective of domestic vehicle sales, trends are implying that the series of interest rates and inflation are inching towards the peak. Also, due to the reduction in interest rates, the mounting pressure exerted by inflation is expected to come down in 2009.

Additionally, the major area of concern for the exporters of components and automobiles in South Africa is to secure their place among the established and emerging markets at the international platform. The duration and degree of recession in the developed markets will decide the extent to which the country’s component and automobile exports will get affected. However, constant growth in the emerging markets is expected to counterbalance the negative impacts to some extent.

According to a Research Analyst at RNCOS, “Global economic recession has caught the hold of weak automobile market of South Africa and is exerting excessive pressure on it. However, there will be an increase in the levels of economic activities and an improvement in the consumers’ economic position in the later half of 2009. Consequently, recovery in the demand of new vehicles is expected to go up from mid-2009.”

Related Market Research Reports:
Booming Russian Automobile Sector
Indian Automobile Sector - A Booming Market

Slovakia Automobile Sector Analysis