Auto CEO warns of price rises as rand weakens
“I predict price increases of between 10% and 12% on new cars in the next six months in South Africa,” says Kia Motors South Africa (KMSA) CEO Ray Levin.
“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.”
He says the vehicle importer has priced their vehicles at R7 to the US dollar. However, the rand has already firmly breached the R9-to-the-US-dollar level this year.
Levin notes 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 is why price moves are likely to happen in an incremental fashion.
For example, by the end of April, KMSA will have increased its new vehicle prices by between 5% and 6% since the start of 2013.
Levin says all vehicle brands in South Africa face similar problems on the back of the weakening rand. However, he adds that the local industry “will get through it”.
“It’s not something to be too nega- tive about. It’s part of the cycle in South Africa. We’ll adjust. We’ll endure.”
The weak rand is also the main reason for Levin predicting modest growth of 1.6% over 2012 numbers in South African new vehicle sales. Other predictions have 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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