The Impact of Inflation on the Automobile Sales in South Africa

Authors

  • Retius Chifurira
  • Innocent Mudhombo
  • Marian Chikobvu
  • Dorah Dubihlela

Abstract

This paper analyses the relationship between inflation (INF) and Automobile sales in South Africa by using the co-integration and causality tests. The analysis has been conducted using monthly data over the period 1960:1 through 2013:9. The Augmented Dickey-Fuller Unit Root test indicates that the two series are stationary in the first-difference not in level. The Johansen-Juselius co-integration test show that INF and new vehicle sales (NVS) are co-integrated in the long run, hence, long-run equilibrium exist between the two variables. This study, using the Granger-Causality test has found that there is one-way causal effect (unidirectional causality) running from INF to NVS at 5% level of significance. Given that the automotive industry contributes 6% to the country’s Gross Domestic Product (GDP) and creating more than 300 000 jobs, South Africa must double its efforts in managing inflation at very low levels.

DOI: 10.5901/mjss.2014.v5n7p200

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Published

2014-04-30

How to Cite

Chifurira, R., Mudhombo, I., Chikobvu, M., & Dubihlela, D. (2014). The Impact of Inflation on the Automobile Sales in South Africa. Mediterranean Journal of Social Sciences, 5(7), 200. Retrieved from https://www.richtmann.org/journal/index.php/mjss/article/view/2473

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Articles