Car and stack of coin. Image: iStock
The sudden spike in vehicle prices post Covid-19 is unlikely to continue for longer as the country’s economy stabilises to prepandemic levels by 2024.
This is the view of WesBank CEO Ghana Msibi, who remarked at the recent South African Auto Week Expo that the high prices, also attributed to the global semiconductor shortage, will eventually level out as supply improves after what has been a trying almost 24 months for automakers gripped by demand, but unable to supply at their full capacity.
Based on a report earlier this month from Auto Evolution, that tyre manufacturing from amongst others Bridgestone, Pirelli, Michelin and Yokohama has ramped up has suggested a likely improvement in manufacturing as a result of the global chip crisis seemingly easing.
“As production at automobile companies began to recover, demand for tyres also showed signs of recovery in the third quarter,” an unnamed Bridgestone representative was quoted by the European Rubber Journal as saying.
Commenting on the development as South Africa’s new vehicle sales continue to soar after ten straight months of increases by the end of October, Msibi stated it expects the trend to continue into 2023.
“We see a move to a ‘clicks and mortar’ model for most of the staff in 2023 as business and banking organisations come to terms with a combination of digital and personal interaction with consumers,” Msibi said.
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He also stated though that despite the improvements, a main aspect potentially on track to hamstring affordability is the amount of tax currently placed on vehicles.
“Locally there are calls from consumers and industry commentators for the government to cut duties and taxes to improve affordability. However, the government’s finances are currently so constrained that they will be hard stretched to make these cuts,” he said.
“What is needed are infrastructural projects that will not only boost the economy but also create jobs and much-needed employment. This, in turn, will mean more people paying tax to grow the fiscus”.
Going forward, Msibi remarked, the local industry will become more accepting of new energy vehicles such as hybrid and EVs, saying the time has comes for emphasis to switch from what the market has known until now.
“A case study of South Africa over the past 30 years will demonstrate the resilience of South Africans. Against all odds – and there have been plenty of challenges in this time – we will pull through together,” he said.
“We have seen this as we recover from the Covid-19 pandemic and will do so as we engage with major transitions in the spheres of NEVs and a transforming automotive industry.
For more information, visit www.wesbank.co.za.
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