Vehicle sales for the month of July are the best they have been since July 2007, and it’s probably a result of the weaker Rand coupled with consumer fears of how this will impact them in the mid term.
Sydney Soundry, the head of vehicle and asset finance at Standard Bank said:
The driver of sales in July may have been the pre-emptive purchasing ahead of expected price adjustments from the impact of the rand exchange rate.
It is expected that the rand will remain on this trajectory in the months ahead. The rand will remain on the back-foot until global prospects brighten and commodity prices turn the corner.
According to the National Association of Automobile Manufacturers there was an increase of 7,5% in new car sales year-on-year in July. Soundry said:
Importantly, the average sales per day in July 2013 outsold July 2012 by 2 153 to 2 080.
Light commercial and medium commercial vehicles were the main contributors to the 6.8% of cars sold this year. The only negative growth was buses. Vehicle sales could increase further according to Soundry due to the prime interest rate.
Low GDP growth and the weakening rand are factors that could be an influence on vehicle sales. Soundry said:
The consumer is experiencing a more challenging economic context which has led to a more conservative appetite to take up debt, and will see pressure being put to bear on repayment ability and a risk for increased defaults and repossessions.
General manager of the motor division at Wesbank, Cyril Zhungu said:
This is backed by WesBank’s book data. July 2013 recorded the second highest month with 116 500 applications received. This represents year on year growth of 9%, compared to July 2012.
WesBank foresees the market remaining positive for the remainder of this year, with a slight increase in activity in the used car market.
We believe that the biggest factor in the foreseeable future will be the effect of a depreciating rand and the ability of the manufacturers to maintain marketing activity in order to support vehicle sales.
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