South African business sentiment dropped in the fourth quarter as subdued demand sent new-vehicle dealers’ confidence to the lowest level since the coronavirus pandemic.

A quarterly business confidence index compiled by FirstRand Ltd.’s Rand Merchant Bank unit and Stellenbosch University’s Bureau for Economic Research declined to 31 in the three months through December from 33 in the prior quarter, according to a report published on Tuesday.

Business confidence among new-vehicle dealers slipped to 6 index points, the lowest level since the second quarter of 2020, which was the strictest phase of the country’s Covid-19 lockdown restrictions.

Weak demand for new vehicles due to pressure on consumers’ incomes because of higher interest rates was among the contributing factors to the plunge in sentiment among dealers.

The central bank’s monetary policy committee has raised interest rates by 475 basis points to 8.25% in its current tightening cycle that started in November 2021, and paused at its last two meetings.