04 February 2013: Demand for new vehicle sales grew at an exceptionally strong rate in January 2013, according to figures released today by the National Association of Automobile Manufacturers of South Africa (NAAMSA) that showed a 14% year-on-year increase in total industry vehicles sales.
According to Chris De Kock, Executive Head of Sales and Marketing at WesBank, South Africa’s leading asset-based financial solutions provider, analysis of the data shows that the biggest contributor to the strong sales growth in January 2013 actually came from the rental market, compared to January 2012. Growth in the Retail Market was much closer to 5%.
However, De Kock says the spike in rental sales was an exception and that sales are expected to normalise during February.
“We are still seeing demand among consumers as a result of the ongoing conducive buying environment, as consumers continue to take advantage of low inflation on new vehicles, interest rates remaining at a 40-year low and the good value that is still being found in the new car market,” says De Kock.
“It should also be noted that the Rand has been very visible over the last month, having experienced considerable weakness, with the result that consumers may be pre-empting a price increase in new models. The fact is that price increases are inevitable and the weakness in the currency will begin to feed through to the CPI component on new vehicles.”
He says the prospect of an increase in interest rates by virtue of the inflationary implications of a weak Rand will also have an impact in the coming months and may feed through to the market towards the end of the first quarter. “This is evidenced by the large percentage of customers opting for fixed rates, with the expectation that rates will go up in the near term.”