South Africa's car industry has no immediate plans to cut new car prices, even as it struggles to attract buyers to its showroom floors.

As dealers across the world continue slashing new car prices by as much as 25 percent, local manufacturers and dealers will keep prices at current levels.

New vehicle retail prices in South Africa have actually gone up by more than 10 percent so far this year, according to McCarthy Auto's chief executive, Brand Pretorius. McCarthy sells 11 percent of all new cars in South Africa.

In April, the new car market experienced the biggest year-on- year drop in vehicle sales in more than 20 years. New vehicle sales volumes have dropped by a whopping 40 percent.

Pretorius said manufacturer car prices would be up 25 percent by the end of the year, despite the massive drop in sales volumes.

Dealerships in the US, Europe and the UK have been giving away big specials on new cars, some slashing prices by more than 20 percent below the factory price.

SA dealers reluctant to drop prices

South African dealers, however, are more reluctant to drop their prices, saying that their margins were not even close to the levels of their global counterparts.

"The more affordable cars are, the better for us as retailers," Pretorius said. "The key to enhancing sales growth is to decrease prices and some dealers are making a real effort to pull customers in."

Mike Tenwick, sales manager at Fury Ford and Mazda Sandton, said though the dealership was only selling only about half of its usual sales volume, it had not introduced any unusual price cuts. He said: "Even in good times we have specials, and we haven't done anything different from what we have always done.

"Specials vary from vehicle to vehicle, and the factory gives us marketing money to assist in pricing or trade-in (incentives). We've adjusted our cost base.

"We are more proactive in our advertising, and our sales people are more awake, spending more time with customers," Tenwick said.

Vehicle stocks were piling up

Venerson Sinivasan, Barloworld franchise manager for Volkswagen, said vehicle stocks were piling up in warehouses as demand fell.

"We are under control from manufacturers and can't really negotiate pricing," he said.

According to Andrew Kirby, senior vice-president of Toyota SA, the company had no plans to cut prices.

"The Toyota network is very healthy and growing even in this difficult climate," Kirby said.

Bill Stevens, Volkswagen's communications manager, defended the car industry's rising prices, saying that car price inflation had been below consumer inflation.

Business Times