Sales in the local new vehicle market climbed to a record 22% last year, showing signs that the economy is arguably at its best in decades, eQuals group executive Loffie Geyser said on Tuesday.
Geyser warned that the current mood of over-spending — due to low interest rates and the overall buoyant economic mood — could have a negative impact within the next 12 to 24 months as consumers run the risk of over-gearing their finances.
eQuals provides outsourcing services for a large number of motor manufacturers in South Africa.
According to the latest statistics from the National Association of Automobile Manufactuers of SA (Naamsa), local car manufacturers sold 449Â 603 new vehicles during 2004, compared with 368Â 470 cars in 2003.
“This is the best sales year since 1981 when 453Â 541 cars were sold. New car sales, like technology stocks, are often a leading indicator of the health of the economy — so these figures are very heartening,” Geyser added.
However, sounding a warning, he said people were spending “as if there was no tomorrow,” which, despite the low interest environment, was reckless and could lead to “unsustainable debt levels further down the road”.
McCarthy Motor Holding’s chairperson Brand Pretorius concurred. Pretorius said the phenomenal growth in the motor industry was largely due to the low interest rate environment, which had, for the first time in some years, put the price of cars within reach of ordinary South Africans.
But he warned that personal disposable income was unlikely to grow this year to the same extent as over the past few ears — and tax concessions in this year’s Budget were likely to be more modest.
The latest statistics show that passenger car sales grew by 21,8% to 301Â 154 units in 2004. During December, a boom month for most retailers, car sales jumped 38% to 35Â 971 units. – I-Net Bridge