Fast Market Research recommends "South Africa Autos Report Q4 2012" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 12/28/2012 -- Car sales in South Africa rose 1.4% year-on-year (y-o-y), to 55,097, in September 2012, the slowest rate since December 2009, according to the National Association of Automobile Manufacturers of South Africa (NAAMSA).
The organisation said that the result reflected 'a significant statistical slowdown in underlying growth momentum,' adding that the Marikana mine shootings and rising levels of industrial action in a number of sectors has dented business confidence in the country.
A NAAMSA statement added: 'Looking ahead to 2013, increasing inflationary pressures on the back of expected higher fuel and food prices and the impact of rand weakness on new vehicle pricing were likely to result in a more difficult trading environment and more subdued growth in vehicle sales.'
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This situation was illustrated by a transport workers strike affecting production at General Motors (GM)' manufacturing plant in the east coast city of Port Elizabeth, as reported by Reuters on October 5. A GM statement said: 'We do have a contingency plan in place which is enabling us to continue to build vehicles but not at our normal production levels,' adding that further disruptions were expected if the twoweek long strike continued.
Despite the disappointing news, there is room for optimism about South Africa's auto industry. BMI believes recent cuts in interest rates coupled with a move by the car rental sector to renew fleets should ensure that new car sales growth is sustained for the rest of the year and into 2013. BMI has lowered its forecast slightly to growth of 10% for 2012 and we expect lower growth again, of 8%, in 2013 as external headwinds create uncertainty for buyers. We estimate that this will contribute to total vehicle sales growth of 10% in 2012 and 8.4% in 2013.
Following a 0.5% cut in interest rates in July, car sales rose 11.5% in August, taking growth for 8M12 to 12.5%. The rise was also fuelled by activity in the car rental sector, which accounted for 15.2% of total passenger car sales of 40,345 units. NAAMSA expects this pattern to remain over the coming months as the rental sector continues its fleet renewal.
Adding further support to sales is BMI's view that the South African Reserve Bank will keep rates on hold for the rest of the year. Our Africa team believes there is an outside chance of a further 50 basis point cut in November, which should further boost sales. Although some premium brands, such as Jaguar Land Rover, have reported that their buyers are not affected by credit, it is still a factor for many consumers and rates will play a part in their buying decisions.
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