Cut interest rates to boost new vehicle market, NADA asks Reserve Bank

Brian Joss – The National Automobile Dealers’ Association (NADA) has urged the South African Reserve Bank to cut interest rates in a bid to boost an ailing new car market.

Mark Dommisse, chairperson, said,  “It’s been a painful start to winter as the new vehicle retail market (passenger and commercial vehicles) continued its downward trend in June. It is now -4.2% down on last year, according to data released by NAAMSA (yesterday, July 1.”

NADA represents franchised car and commercial vehicle retailers in South Africa.

“We would like to see the Governor of the South African Reserve Bank announce lower interest rates this month in an attempt to stimulate the retail sales market (subject to the strict inflation target mandate that SARB has, of course).

“Drastic action needs to be taken by government in order to stimulate the retail sales market across all sectors of the economy. We live in a consumption-based society with consumer confidence a big driver. As consumers increase expenditure and confidence, the economy grows. The lowering of interest rates, together with the price of fuel due to decrease substantially, will go a long way to assisting both the consumer and the private sector,” continues Dommisse.

“Despite the overall chill, the resilience shown by the used car market continues to partially offset the decrease in new vehicle registrations with many consumers considering second-hand cars as the most viable option for them. We look forward to seeing more stability in the new vehicle market in the second half of the year.

“Finally, NADA appeals to all South Africans to support President Cyril Ramaphosa’s plans to create youth employment, an inclusive economy, and build infrastructure. People with jobs will enable them to spend and invest, ultimately driving the economy,” Dommisse concludes.

* Overall Dealer sales channel for June 2019 – 36 922 new vehicles (passenger and commercial vehicles) were sold on dealer floors in June 2019 (2018: 38 292 showing a -3.6% reduction in sales on dealer floors compared to the same month last year)

*Cumulative year-on-year June 2019 compared to June 2018 – 215 206 new vehicles sold on dealer floors year-to-date to June 2019 (2018: 224 564 showing a -4.2% decline on dealer floors for the year).

CAPTION: Plea: Mark Dommisse, Nada chair.

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