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Economic slump hurts new car sales

By Chanel George

The retail motor sector is feeling the strain of the current challenging economic conditions.

The retail motor sector is feeling the strain of the current challenging economic conditions as the industry grapples with lower new car sales attributed to high interest rates, soaring fuel prices and the impact of load shedding on the economy.

Both Naamsa (The Automotive Business Council) and Misa (The Motor Industry Staff Association) have voiced their concerns following the recent release of new vehicle sales statistics for September 2023.
New car sales numbers in September stood at 46 021, marking a 4,1% drop from September 2022’s 47 984.

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The Automative Business Council said that factors such as rising fuel costs, persistent transportation logistics issues, Eskom’s power supply challenges, fluctuating commodity prices, and a challenging external environment have heavily impacted the automotive industry’s performance for the month.

Misa has warned that ongoing pressure on the retail motor industry is likely to impact numerous dealerships and could lead to restructuring and possibly job cuts as the industry grapples to maintain profitability and growth.

An international tyre producer recently proposed the closure of eleven of its retail stores in South Africa, citing the economic conditions and the growing cost of doing business as reasons.

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Martlé Keyter, Misa’s chief executive officer: operations, said that 53 Misa members were retrenched last week due to three Gauteng dealerships shutting down.

“Another prominent dealership group has announced restructuring at eleven sites nationally. The total number of employees impacted remains uncertain,” added Keyter, highlighting daily power outages, soaring fuel prices, and an 8,25% interest rate, the steepest in 14 years being key factors impacting the industry.

The repercussions are not limited to car sales but ripple through the industry. It’s a ‘perfect storm’, with households, businesses, and industries reeling. Many potential buyers are stymied by poor credit

Fuel prices experienced a sharper increase than anticipated from October 4, with petrol seeing hikes between R1,08 (93 Unleaded) and R1,14 (95 Unleaded), and diesel between R1,93 (50ppm) and R1,96 (500ppm).