Car sales dip ‘no surprise’

File photo: AFP

File photo: AFP

Published Feb 2, 2016

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Johannesburg - WesBank says the decline in new vehicle sales recorded in the first month of 2016 was no surprise at all, and came about as a result of a variety of macroeconomic factors.

The latest consolidated sales data from the National Association of Automobile Manufacturers of South Africa (Naamsa) released on Monday shows industry sales came to 48 615 vehicles, a year-on-year decline of 6.9 percent.

Naamsa also predicted the full-year 2016 car market would fall 9 percent from last year's level, to about 375 000 units.

Simphiwe Nghona, chief executive of the motor division at WesBank, says the decline in new vehicle sales came as no surprise in the current economic climate, with consumer and business confidence at very low levels as a result of a number of macroeconomic factors.

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“Consumer's budgets will face increasing pressure this year in the form of rising interest rates and food price inflation. While inflation is unavoidable, consumers who apply for credit can still take measures to accommodate future interest rate hikes,” Nghona said in a statement.

“We have already observed more customers opting for fixed interest rates, which now account for 55 percent of all transactions compared to 49 percent in January 2015.”

Nghona added the spike in rental sales was an anomaly, most likely due to rental companies choosing to re-fleet ahead of new car price increases.

“Despite this positive activity in the rental market, total industry sales still saw a decline,” Nghona said.

WesBank said it expects a continued shift to the used market throughout this year as cash-strapped and budget-conscious consumers address affordability.

AFRICAN NEWS AGENCY

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