Gary McCraw, the National Director of (Nada), said the decision by the Reserve Bank to increase the interest rate by 50 basis points, resulting in a hike in the prime lending rate to 11.25%, was a real setback for vehicle sales.

McCraw said the interest rate hike had possibly been factored in by some buyers who then chose to stay out of the new-vehicle market for now.

He added that March 2023 was a month of uncertainty, with the Human Rights Day public holiday and the threat of a protest on the day preceding it.

“The fact that total sales exceeded the 50 000-unit mark was a positive sign, showing that there is still ongoing, pent-up demand for new vehicles.

“It is interesting to note that the 50 000 mark has been surpassed only twice since October 2019, now in March 2023 and in March 2022.

“The retail dealer network fared well under the circumstances, with many of them having closed over the Human Rights Day period,” he said.

Sales of new passenger cars declined year-on-year by 6.4% to 31 631 units last month.

However, the passenger car market was the only market segment to experience a decline in sales, with sales of new light commercial vehicles, bakkies and mini-buses increasing year-on-year by 11.1% to 15 529 units, medium commercial vehicles by 10.1% to 870 units and heavy trucks and buses by 11.1% to 2 127 units.

McGraw said the vehicle dealership share of the new vehicle market continued to hold up, with the 87.3% share of total sales even better than the 83.6% attained in February this year.

“On a year-to-date basis, the dealers have sold 2 230 more vehicles this year than in the same period in 2022 – 117 178 versus 114 948 vehicles,” he said.

Looking ahead, McCraw said many local companies have entered a new financial year, and Nada believed there may be a greater appetite for these companies to start buying vehicles again.

“Ongoing load-shedding and changes in company policies are seeing many more people now returning to work in their offices instead of at home, which means they are driving daily and could also be a spur for new car sales.

“We also believe that the increase in interest rates may result in a speed up of the buy down trend.

“We are hopeful that people who intend replacing their cars this year will still do so, as there are a host of new models arriving, and new vehicle stock levels are much improved. This could lead to more aggressive trading,” he said.

Lebogang Gaoaketse, Head of Marketing and Communications at WesBank, said the higher-than-expected interest rate hike would make existing linked finance agreements more expensive.

Gaoaketse said it would no doubt also challenge affordability and future purchase decisions for the new-vehicle market, which could begin impacting sales volumes over the coming months.