Rising interest rates may squeeze many consumers out of the new-vehicle market in coming months, warn analysts.
Figures released on Monday show sales of cars and commercial vehicles last month were below those of March 2022. After the Reserve Bank hiked interest rates by 50 basis points last week, consumers will find it even harder to finance new deals — or pay for those they already have.
Mikel Mabasa, CEO of Naamsa, said last week’s rate increase — pushing prime to 11.25%, its highest level since 2009 — was likely to “have a negative impact on already severely financially constrained consumers’ affordability to purchase vehicles and/or service their car-loan repayments”.
WesBank marketing head Lebogang Gaoaketse said: “In addition to making existing linked finance agreements more expensive, the higher than expected interest rate hike will challenge affordability and future purchase decisions for the new vehicle market, which could begin affecting sales volumes over the coming months”.
Both men remained bullish though. Gaoaketse observed that last month was only the second time since October 2019 that monthly sales exceeded 50,000 (the other occasion was March 2022) and that growth this year “remains possible”. Mabasa is sticking with his previous forecast that the full-year market will grow 6.3%.
The motor industry sold 50,157 cars and commercial vehicles last month — 0.6% fewer than the 50,465 of March 2022. Car sales took the biggest knock, dropping 6.4% from 33,788 to 31,631. This was partially offset by 11.1% growth in the market for light commercial vehicles, mainly bakkies and minibus taxis. Medium-sized and extra-heavy trucks also outperformed in 2022 but heavy trucks suffered a 9.1% fall.
Aggregate industry sales for the first quarter of 2023 totalled 139,437, a 2.4% improvement on the 136,192 at the same stage of 2022. Car sales were down 0.6%, from 93,644 to 93,100.
Mabasa said last month’s sales were not helped by the EFF-induced national lockdown, which forced many dealers to close their doors for a day.
Load-shedding is a big contributor to consumer and business anxiety but Gary McCraw, director of the National Automobile Dealers’ Association, suggested it could also have a benefit. Many people were returning to their offices to avoid power cuts at home, “which means they are driving daily, which could also be a spur for new-car sales”.
With regular launches of new vehicles and improved stock levels, he predicted “more aggressive trading” by dealers and manufacturers to shift vehicles.
Vehicle exports grew 3.1% last month compared with a year earlier, from 33,108 to 34,135. After three months of 2023, however, they lag last year by 4.1% — 84,774 against 88,363.
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