Downgrade may put brakes on car makers
The local new-vehicle market has gone from feast to famine in just a few weeks
Multinational vehicle and components companies may be investing in the South African motor industry at unprecedented levels, but will their largesse survive the fallout from South Africa's credit downgrade to junk status and government's apparent abandonment of sound economic principles? The local new-vehicle market has gone from feast to famine in just a few weeks. In mid-March, analysts were predicting a quicker-than-expected recovery from three years of declining domestic new-vehicle sales. Now, with the country's downgrade and President Jacob Zuma appointing a cabinet that fills few with confidence, the mood has changed. There are warnings of further market decline that could extend into 2018 and beyond.Craig Parker, African automotive head at the Frost & Sullivan business consultancy, says downgrade-induced rand weakness, rising interest rates, reduced returns and general pessimism about South Africa's economic sustainability are likely to undermine the confidence of foreign in...
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