According to the latest report by the National Association of Automobile Manufacturers of South Africa (NAAMSA), aggregate total domestic sales rose by 2.1% to settle at 48 534 units compared to 47 514 moved last year. Individual segments also posted gains with passenger vehicle sales improving 2.1% from 30 390 to 31 034, while light commercials jumped by 1.1% from 14 713 to 18 882.

The market for medium and heavy duty commercial vehicles though reflected the strongest growth with upturns of 11.2% and 7.4% respectively. Despite previous predictions, exports for March dropped by 9.7% from 27 720 to 25 020 units.

In the same report, the association however warned that the recent political developments could have a have a severe impact on vehicle sales from April onwards.

"In the short term, South Africa’s economic prospects will be affected adversely due to the shock to business confidence as well as to foreign and domestic investment sentiment. Business confidence is a necessary condition for economic growth," the association said.

"The likelihood of exchange rate weakness and resultant higher inflation, upward pressure on interest rates, lower private investment spending, higher government debt servicing costs and lower tax revenue receipts will combine to contribute to a lower economic growth rate and less employment".

It further stated that the long standing fear of a credit ratings downgrade over the medium term is now all but guaranteed following President Jacob Zuma's shock firing of Finance Minister Pravin Gordhan and his Deputy Mcebisi Jonas last week Friday, and that the effects "will cost South Africa dearly".

"The international and domestic investment community regard political stability, continuity of policy and fiscal discipline as key requirements. It was in light of these concerns that government, business and labour implemented a joint strategy aimed at positively influencing foreign investors and credit ratings agencies to avoid/reduce the growing risks of country credit downgrades," NAAMSA continued.

"In light of the political events, NAAMSA will suspend, for the time being, projections for domestic vehicle sales. Once the situation and conditions have settled down and greater clarity is forthcoming as to the impact of the political events on the direction of the economy – the Association will resume and offer guidance on expected new vehicle sales trends. Both in the short and medium term scenarios, the risk of lower vehicle sales is significantly on the downside".

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