New car prices to jump 10% to 12% in next six months, predicts Kia SA boss
“I predict price increases of between 10% and 12% on new cars in the next six months in South Africa,” said Kia Motors South Africa (KMSA) CEO Ray Levin on Wednesday.
“If the rand remains at R9 to the dollar we could possible see a 20% increase. There is no doubt the rand-dollar exchange rate has put [the industry] under pressure.”
Speaking at the launch of the new Sorento crossover utility vehicle in Muldersdrift, outside Johannesburg, he said the vehicle importer had priced their vehicles at R7 to the US dollar. However, the rand had already firmly breached the R9-to-the-US-dollar level this year.
Levin noted that “there would be bedlam” if all vehicle manufacturers simply immediately put up new vehicle prices by 20% to cater for the sudden and dramatic weakness in the rand, which was why price moves were likely to happen in an incremental fashion.
For example, by the end of April, KMSA would have increased its new vehicle prices by between 5% and 6% since the start of 2013.
Levin said all vehicle brands in South Africa faced similar problems on the back of the weakening rand. However, he added that the local industry “would get through it”.
“It’s not something to be too negative about. It’s part of the cycle in South Africa. We’ll adjust. We’ll endure.”
The weak rand was also the main reason for Levin predicting very modest growth of 1.6% over 2012 numbers in South African new vehicle sales. Other predictions had been more upbeat, at between 5% to 7%.
“But this might be optimistic if you look at the rand-dollar exchange rate.”
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