South Africa’s general inflation rate has reached its lowest level in three years, and this could bode well for a potential interest rate cut in July.
On Wednesday, Statistics South Africa (StatsSA) said the country’s Consumer Price Index (CPI) had eased to 4.6% year-on-year, down from 5.1% in June.
This has led to widespread hopes that the South African Reserve Bank would begin its eagerly-anticipated interest rate cutting cycle from September.
Lower interest rates, coupled with the anticipated fuel price reductions, would provide a much needed boost to South Africa’s motor vehicle industry, as the overall cost of vehicle ownership would be reduced, says Brandon Cohen, chairperson of the National Automobile Dealers’ Association (NADA).
“For consumers, a potential interest rate cut by the South African Reserve Bank in September could lead to more affordable financing options for purchasing vehicles.
“Lower interest rates would reduce monthly instalment costs, making it easier for South Africans to invest in new and used vehicles,” Cohen said.
He said NADA was confident that these developments would contribute to a more vibrant and resilient automotive industry in South Africa.
““This positive economic outlook could lead to increased activity within the automotive market, creating opportunities for dealerships to expand their customer base and improve sustainability,” Cohen added.
South Africa’s new vehicle market grew by 1.5% in July 2024, versus the same month last year, while the passenger car segment expanded by 6.8% year-on-year.
However, used vehicle sales are showing even more positive growth, according to data by AutoTrader, which showed a 14% month-on-month growth rate in July.
“The increase in new car passenger sales indicates that consumers are in a better financial position. What’s more, new car sales fuel future used car sales and newer vehicles feeding car parc growth,” said George Mienie, CEO of AutoTrader.
IOL Motoring