Sales of new cars nose-dived last month by more than 23 percent from a year before, partly because early Easter holidays shortened the trading month.

Total new vehicle sales reported to the National Association of Automobile Manufacturers of SA (Naamsa) declined by 17.5 percent year on year to 47 778 units, with new car sales falling to 27 724 units.

Motor industry analyst Tony Twine, a director of Econometrix, said last month had two fewer trading days than in March 2007, or a 9 percent reduction in selling time.

He noted that growth in passenger vehicle sales had been in a downswing since October 2006, an early response to the interest rate hikes that began in June 2006. Car sales had fallen 30 percent in the 18 months since hitting an incredibly high point just before October 2006.

There was a huge dichotomy in the economy as downward pressure on consumers to prevent them spending contrasted with a ballooning business sector that was trying to sustain the fixed investment cycle.

Sales of new light commercial vehicles, bakkies and minibuses dropped to 16 616 units last month, a dip of 10.7 percent from March last year.

Medium truck sales rose by 2.6 percent to 1 321 units and heavy truck and bus sales leapt 9 percent to 2 117 units.

Nico Vermeulen, Naamsa’s executive director, said the data should be seen in context, because new vehicle sales in March last year represented one of the highest sales months on record and Easter holidays fell in March this year, reducing the number of selling days.

Jacques Brent, the vice-president for sales and market at the Ford Motor Company of Southern Africa, said sales last month were slightly up on February, but overall market sentiment remained unchanged with “tough times ahead”.

Brent said Ford had revised its forecast for total industry new vehicle sales downwards to 570 000 this year from 590 000.

Brand Pretorius, the chairman of McCarthy Motor Holdings, said the key reason for the much lower car sales was that both business and consumer confidence were under siege.

Current sales figures were not an accurate reflection of spontaneous demand, he added. They resulted from intense discounts, cash-back offers and subsidised interest rates that were stimulating the market artificially.

“We believe market demand is actually at a significantly lower level. Purely from a motor industry perspective, there is no need for a further interest rate increase, as demand has already slowed right down.”

Malcolm Gauld, the vice-president of sales and marketing at General Motors South Africa, said the significant cost push burden of a sudden deterioration in the rand meant pricing adjustments were unavoidable in the short term.