It is still no surprise that people are not buying cars in South Africa like they used to. Honestly, how many people can afford to buy a new car today with the economic hardships being faced? Yes, interest rates are coming down, but the smart person realises that this is not the best time to buy a car and would rather use that extra cash they saving from interest rate repayments for something else rather than a new car. South African new vehicle sales in March 2009 were down 30.3% year-on-year compared with a fall of 36.3% y/y in February, figures from the National Association of Automobile Manufacturers of South Africa (Naamsa) on Thursday (2 April) showed.

Statistics show that in March 2009, new car sales were 21 282 units reflecting a decline of 6 508 units or 23.4% compared to the 27 790 new cars sold during March 2008. Even on the car export front, things are not looking great. Exports of South African manufactured motor vehicles during March 2009 were 17 896 vehicles, a decline of 5 061 vehicles or 22.0% compared to the 22 957 vehicles exported during March last year. Yet again, no surprise in this figure as most cars exported from South Africa are for the European, Japan and ISA markets and we all know what they are going through with the credit crunch!

It looks like it is not only South Africa which is cutting interest rates of late. The European Central Bank (ECB) decided yesterday (Thursday) to slash interest rates again. European Central Bank President Jean-Claude Trichet, cut the banks benchmark interest rate by 25 basis points to 1.25% and it could still be lowered further next month as they try to find a way to help the struggling European economy. The ECB has now reduced interest rates by 3 percentage points since early October. At 1.25 percent, the main rate is the lowest since the ECB took charge of monetary policy in 1999.

Trichet said the key rate may be reduced further “in a very measured way.” The deposit rate, which the ECB cut to 0.25 percent, is at “an extremely low level” and has probably reached its floor, he said. The ECB is allowing the deposit rate — the rate it pays banks on overnight deposits — to steer short-term market borrowing costs. This from a report on Bloomberg.