(Bloomberg) -- Ford Motor Co. said it expects the South African new car market to grow slightly next year as a stable rand and interest rates could boost sales.
Purchases may increase 1 percent to 2 percent in 2017 compared with this year, Jeff Nemeth, chief executive officer of the U.S. automaker in sub-Saharan Africa, told reporters in Pretoria on Tuesday. That compares with a 12 percent decline in the 11 months through November and a 5.9 percent fall in 2015, according to the National Association of Automobile Manufacturers of South Africa.
“Our outlook for the rand is we see it flat to strengthening a bit next year which will make imported vehicles more affordable,” Nemeth said. “In addition to that, we're continuing to see lending institutes in South Africa implement progressive financing plans.”
Nemeth's forecast suggests the new car market in Africa's most industrialized economy may have bottomed out after rising interest rates and unemployment of 27 percent hurt consumer spending. The automaking industry is one of the bright spots in the South African economy, with Ford among international manufacturers investing in new capacity, although many of the vehicles made locally are for export.
Recent labor agreements in both the car and component makers industries without strikes bode well for the future of automotive manufacturing in South Africa, Nemeth said.
FirstRand Ltd.'s First National Bank sees new car sales “flat to slightly negative,” according to the lender's senior industry analyst, Jason Muscat.
To contact the reporter on this story: Liezel Hill in Johannesburg at lhill30@bloomberg.net. To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, John Bowker, Michael Gunn
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