Economists say recovery is expected only in March which generally shows an improvement in passenger cars.
Even then, recovery will only be marginal.
Standard Bank's economists said in a research note on Friday: “Despite a notable decline in interest rates in February and the signal of intent to cut rates further in the year, we don't expect this to have led to any rush of consumers to showroom floors.
“In the face of deteriorating global economic performances and brewing uncertainties over the impact on South Africa, sales of new passenger cars may remain lacklustre.”
Brand Pretorius, executive chairman of McCarthy Motor Holdings, said he expected February sales to be similar to January's.
He said: “We expect once again a decline of close to 30% on the corresponding period.
“Demand from the fleet sector remains rather depressed because most companies are not renewing their fleet.
“As far as private customers go, the reason we are not making major sales is because of the inability of customers to get credit.”
Pretorius said the credit approval ratio was at an all-time low.
“It used to be that out of all applications, 55% would be approved, now it is closer to just 20% that's approved.”
He said the only thing that would bolster the market was distress selling — the abundance of special offers available to consumers currently.
“We are pulling people into the market because we can offer very attractive deals. It's a buyers' market,” he said.
The local auto industry is facing tough times as motorists hang on to their old cars rather than rushing to the showrooms, and the export market dries up. An industry insider said export orders had been reduced significantly because of the global economic situation.
“Key export destinations, such as the US, Europe, Australia and Japan, are depressed, so we can't expect them to be buying from us as much as they used to when times were good,” he said.
As a result of these factors, an estimated 22,500 jobs are on the line.
Last week, the president of Naamsa, David Powells, and the president of the National Association of Automotive Component and Allied Manufacturers, Stewart Jennings, presented the industry's dire case to Minister of Trade and Industry Mandisi Mpahlwa in Pretoria.
A task team was set up to look at possible measures to help the ailing industry. The representatives from two employer bodies have said the organisations would need a combined R10-billion injection.
Source: The Times
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