No car price cuts

Zweli Mokgata

Zweli Mokgata

South Africa's car industry has no immediate plans to cut new car prices, even as it struggles to attract buyers on to its showroom floors.

As vehicle dealers across the world continue slashing new car prices by as much as 25percent, local manufacturers and dealers are set to keep prices at current levels.

New vehicle retail prices in South Africa have actually gone up by more than 10percent this year, according to McCarthy Auto's chief executive Brand Pretorius. McCarthy sells 11percent of all new cars in South Africa.

In April the new car market experienced the biggest year-on-year drop in vehicle sales in more than 20 years. New vehicle sales volumes dropped by a whopping 40percent.

Pretorius said manufacturer car prices would be up 25percent by the end of the year despite the massive drop in sales volumes.

Dealerships in the United States, Europe and United Kingdom have been giving away massive specials on new cars, some slashing prices by more than 20percent below the factory price.

South African dealers however are reluctant to drop their prices, saying that their margins were not even close to the levels of their global counterparts.

"The more affordable cars are, the better for us as retailers," Pretorius said. "The key to enhancing sales growth is to decrease prices and some dealers are making a real effort to pull customers in."

Mike Tenwick, sales manager at Fury Ford and Mazda Sandton, said that while the dealership was only selling just over half of its usual sales volume it had not introduced any unusual price cuts.

He said: "Even in good times we have specials, and we haven't done anything different from what we have always done."

Venerson Sinivasan, Barloworld franchise manager for Volkswagen said vehicle stocks were piling up in warehouses as demand fell.

"We are under control from manufacturers and can't really negotiate pricing," he said.

"Dealers will have to cut prices on cars that aren't being bought to buy and make higher margins on cars with stronger demand."