Higher prices for vehicles in South Africa caused by the weak rand, along with higher interest rates, are continuing to dent the country's vehicle market. On the upside, the soft currency means export prospects appear bright.
According to the latest aggregated figures from the National Association of Automobile Manufacturers of South Africa (NAAMSA) total industry new vehicle sales declined 9.2%, year-on-year in April, 40,390 new vehicles sold across all segments. Passenger car sales fell 13.2%, year-on-year, with sales of 26,077 new cars during April.
New vehicle exports were up 39% in April to 32,856 units. NAAMSA said that the momentum of new vehicle exports was expected to remain at or above current higher levels over the balance of 2016. With further reductions in vehicle imports in response to lower domestic sales and the expected strong growth in vehicle exports – the industry should continue to contribute positively to South Africa's current account of the balance of payments, NAAMSA noted.
However, it said the balance of 2016 was likely to continue to be characterised by subdued economic growth and pressure on consumer disposable incomes. The likelihood of double digit new vehicle price increases in response to earlier rand weakness and the possibility of further interest rate hikes would combine to further pressurise consumers and businesses at a time of rising retrenchments across a number of sectors. Above-inflation new vehicle price increases, estimated at between 12% and 15% plus for the year, would put further downward pressure on sales of new motor vehicles, NAAMSA said.
However, NAAMSA said that new vehicle industry production would continue to benefit from projected higher export numbers with 2016 export sales expected to expand to around 360,000 units.