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November's new car sales figures show consumers noting rate hikes

By unknown | Dec 05, 2006 | COMMENTS [ 0 ]

Thomas McLachlan

Thomas McLachlan

A dent in November's new car sales shows a significant slow down in consumer spending, resulting from higher interest rates, but according to manufacturers, this will not be a barrier to this year setting yet another record in vehicle sales.

The National Association of Automobile Manufacturers (Naamsa) released November's new vehicle sales yesterday.

While sales rose 9,6 percent year-onyear to 55378, they slowed 4,2 percent on October's figures as consumers began to retreat to a position of safety, following three 50 basis point interest rate hikes since June, bringing the repo rate to 8,5 percent.

Industry players said passenger car sales growth was particularly slow.

"When looking at the Naamsa sales results, November 2006's sales were only 2.1 percent up on November 2005's figures, but 6.7 percent down on the sales recorded during October 2006," said Brand Pretorius, chairman of McCarthy Motor Holdings .

While a serious slowdown could pose a threat to employment in the leading manufacturing industry, the cooling-off is a good indication that consumers may be taking heed of the \ongoing rate hikes.

"These figures are good news for the interest rate outlook, and while rates are expected to go up this week by 50 basis points, any indication of slowing consumer demand will moderate the probability of further rate hikes in the first and second quarters of next year," said RLJP analysts.

Motor finance company Wesbank said one noteworthy result of the interest rate hikes was that consumers were choosing fixed-rate payment options to avoid having to pay more each time there was a hike.

"Our book indicates that our average deal size has remained stable at R136000 while there has been a marked increase in the number of customers choosing fixed rates over variable rates," said Wesbank chief executive officer Ronnie Watson.


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