New car sales set for further decline

NEW car sales in South Africa are likely to fall at least 5% this year as mounting household debt and shrinking disposable income restrict access to credit.

With both new-vehicle prices and interest rates expected to rise‚ financial institutions say they expect a strong swing towards used cars in the next few years.

Standard Bank's head of secured lending‚ Steven Barker‚ has said that inflation‚ exchange rates and rising fuel prices also contributed to a steady rise in the cost of vehicle ownership.

South Africa's unbroken record of negative savings since 2005 – consumers have spent more than they earned for nearly a decade – was unsustainable, he said.

With individual buyers‚ rather than fleets and companies‚ accounting for 71% of new-car sales in South Africa‚ a continuing effect on the market was inevitable. – I-Net