South African new vehicle sales declined by 12,1% year-on-year in June, data showed on Tuesday, as the effects of higher interest rates pinched household budgets.
The National Association of Automobile Manufacturers (Naamsa) said 50 056 new units were sold in June compared with 56 927 in the same month last year. Including sales from the Associated Motor Holdings company, total sales were 54 061 vehicles.
Naamsa said the decline in new vehicle sales was a delayed reaction to interest-rates increases last year, which resulted in households tightening their budgets, as well as higher fuel costs.
The Reserve Bank raised interest rates by 200 basis points between June and December 2006, and by another 50 basis points last month in a bid to curb consumer spending that was putting pressure on inflation.
The government also introduced a new credit law on June 1, aimed at lowering indebtedness, which reached a record high of 76% of disposable income in the first quarter of 2007.
”A second key factor [for lower car sales] revolved around … the stringent provisions governing the granting of credit in South Africa,” said Naamsa in a statement.
”Another factor was the effect of new car price inflation, which had shown steady increases … as vehicle manufacturers sought to recover cost increases associated with rising domestic inflationary pressures and exchange-rate weakness,” it said.
Naamsa said sales of commercial vehicles continued to grow on the back of positive investment trends, with medium and heavy truck sales growing by 5,8% and 9,3% respectively, compared with the same month last year.
New vehicle exports slowed by 1,2% from the corresponding month last year while cumulative exports of the first six months of this year showed only a marginal increase from the same period last year.
Naamsa said the outlook for the sector depended on the direction of interest rates, new car prices and overall economic performance. — Reuters