South Africans moving to smaller cars due to weaker rand

Raising petrol prices and sharp drop in the Rand value is changing the face of Africa’s largest economy. Car sales was viewed as one of the few growing sectors this year as South Africa was striving hard to recover from the 2009 recession.

Rand had fallen by 16% against dollar this year, including a four year low of 10.51 last month, which took the petrol prices to the highest ever hike of 13.55 rand ($1.41 U.S.) a litre in August which was approx double than in early 2009.

Due to this the total demand of petrol in South Africa came down by a 37% from April to July, according to import data, as people either stayed at home or shared their rides or preferred to travel by cheaper vehicles.  

Toyota spokesman Leo Kok said “People who can afford luxurious cars and big sedan’s are now moving towards the diesel cars.”

Toyota Motor, the biggest car manufacturer in South Africa said that 98% of their sales is from their diesel car Fortuner SUV. Diesel cars are more efficient than their petrol driven models.

Industrial data states that two third of the passenger sales are now the small vehicles compared to 61% four years ago. Due to this even smallest vehicles have increased their market shares by from 16% to 25%.  

As weaker Rand is attracting the buyers towards the smaller and more efficient cars, it should help the local manufacturers as cheap Asian imports became more expensive and the local made products looked more reasonable and cheap.

Coenraad Bezuidenhout of the manufacturing output, a factory lobby group said that “This weakening Rand value makes it more difficult to compete the unfair incentivised products coming from east in our domestic market.”

The purchasing manager’s index hit the six years high in August and in July the manufacturing output was seen growing to 5.4% year on year from 0.5% the previous month.