Rising Fuel Price Hurting the Car Industry

The high fuel prices are also affecting the demand of the vehicles and give rise to the situation where the South Africans hold off their car purchasing decision for some time. In the period of recession, this is a double impact for auto industry. Monthly fuel spend increase is affecting people’s affordability of buying a car and hence some people slope down their car to the smaller model’s which are fuel efficient.

It has been noted that due to this fuel inflate, South Africans are now spending more of their economy on petrol than on their monthly vehicle instalments. Due to this fact, people are looking for cars with smaller monthly installments. More and more people are moving towards buying a small car, the sales market of luxurious and large size cars are adversely affected. To overcome this situation and to gain the sales margin, some car companies may take actions like offering huge discounts on selected car model’s.

The price of petrol can be viewed as the most affecting factor of the South African economy. The petrol hike may also affect to the people who prefer to travel through public transport vehicles as they may include their fair charges due to the petrol hike. An increase in the price of petrol will undoubtedly create an increased pressure on inflation.