June new vehicle sales in South Africa fell 6,871vehicles or 12.1% to 50,056.

New car sales declined 7,276 units or 19.1% to 30,839 units year on year or by 658 units (2.1%) compared with May.

Local trade group NAAMSA said interest rate rises since the middle of last year compounded by high household expenses and fuel prices were to blame along with new national legislation introduced on 1 June that imposed stringent provisions governing the granting of credit in South Africa.

Another factor was the effect of new car price inflation which had shown steady increases since the fourth quarter of last year as vehicle manufacturers sought to recover cost increases associated with rising domestic inflationary pressures and exchange rate weakness.

NAAMSA said the new car market would take some months to adjust to the stricter credit extension rules though there is now increased flexibility and affordability due to the introduction of private leasing/rental from 1 June.

The market was likely to take some time to adapt to the structural changes and new circumstances influencing the relationship between consumers, financial institutions and vehicle suppliers, it added.

Sales of new light commercial vehicles, bakkies (pickups) and minibuses rose 161 units or 1% year on year to 15,853 last month.

Medium and heavy truck sales were 1,385 units (+5.8%) and 1,979 units (9.3%), respectively, and 168 units (9.3%) for heavy trucks and buses so it wasn’t all bad news.

June new vehicle export sales declined 158 (1.2%) to 13,022 units in June. Export sales for the first six months of 2007 showed only a marginal improvement.

NAAMSA said exports was expected to improve as a result of various new programmes – the country is building redesigned Mercedes C-class and Toyota Corolla model lines which have healthy export history.

“The new car market could show further consolidation over the short-term, however, new commercial vehicle sales should continue to receive support from infrastructural development spending and construction activity,” it said.