RAND Deflation Affecting the Car Prices in SA
Jul 25, 2013 164 view(s)The RAND shrinkage is likely going to affect the vehicle prices this year. A noteworthy inflation may be seen in the prices of the car and other vehicles this year. Even though South Africa is capable of manufacturing its vehicles locally, the fall in the value has greatly affected the sell in the vehicles which is done at domestic level. The selling would also be affected as most of the parts used in the car production are imported.
According to NAAMSA i.e. National Association of Automobile Manufacturers in South Africa, there were more than 60 brands and around 2100 car models available in the market in the initial days of this year. The ratio of the number of imported vehicles sold was two third than the percentage of the vehicles sold in 2000 which was 26.3%. The ongoing RAND weakness also affecting the results of higher import cost.
The survey by the Automotive Export Manual in 2012, most of the parts are purchased imported in euros and japanese yen. The imports are done mostly from South Korea, Thailand and China. It is important to compare the value of all the currencies with the value of RAND to know the exact exchange rate. But, if we consider the exchange rate of the last year then the Japanese car lovers can relax and take a deep breathe over here as Yen is the only currency that is standing steady against this deflation.
Consumers can experience some pressure with the value of RAND at R9.60 to the US dollar. According to the executive head of sales and marketing at WesBank, the car price are likely to inflate due to these exchange rates. In this situation different manufacturers have their own lead time and take different actions if required. They can take a specific amount of time to release the increased new price of the cars in the market.