Business

Black middle class boosts car sales in South Africa

Jerome Cartillier

Sales of new cars in South Africa have reached all-time highs, boosted by an emerging black middle class, once under apartheid's thumb and now playing an increasingly important role in the economy. The National Automobile Association of South Africa announced this week that car sales figures for the first time shot past the half-a-million-mark in 2005.

Sales of new cars in South Africa have reached all-time highs, boosted by an emerging black middle class, once under apartheid’s thumb and now playing an increasingly important role in the economy.

The National Automobile Association of South Africa (Naamsa)—which represents all major motor manufacturers—announced this week that car sales figures for the first time shot past the half-a-million-mark in 2005.

The industry sold 565 018 new units last year, up 25,7% from the previous year, with a quarter more South Africans fleshing out money for new private cars last year compared to 2004.

Nico Vermeulen, Naamsa’s director attributes the surge in sales to a boom in the country’s economy, which grew at an estimated five percent last year, low interest rates and the emergence of the new black middle class—or “buppies” as they are known in South Africa.

“The black middle class is playing a more and more important role in the demand [for new vehicles],” said Vermeulen.

“A third of total sales are today from consumers in the black community,” he added.

Even though economists argue over the exact definition of the black middle class and therefore its exact size, they all acknowledge its growing importance.

“The picture is clearly emerging of a fairly rapidly growing black middle class,” said Servaas van der Berg, professor of economics at Stellenbosch University near Cape Town.

The new black middle class, said economists, have a tendency to concentrate their incomes on buying durable consumers’ goods such as cars or real estate, rather than contribute to sectors such as tourism.

“The reason for that seems to be that they still have an asset deficit which resulted from apartheid times,” said Van den Berg.

Analysts warn however against drawing hasty conclusions in a country in which, 12 years after its first democratic elections, wealth still remains concentrated mainly in white hands.

In a study made public in August, the Centre for Development and Enterprises (CDE) said the African middle class “is much smaller than is popularly believed, but is growing very rapidly”.

“In South Africa, there is pressure, for nation-building purposes, to be optimistic about the redistribution of wealth and opportunity, and to talk up the country’s recent economic progress,” the CDE said.

Roger Southall, researcher at the Pretoria-based Human Sciences Research Council (HSRC), also warned that the rise of the black middle class was largley linked to high levels of debt.

“New black middle classes are often first generation at that level,” he said.

“Hence, to finance houses, cars, household consumer goods and school fees they have a lot of spending to do—in contrast the white middle classes who as a whole tend to be better established.

“Any downturn in the economy or rise in interest rates is therefore likely to render the black middle class rather more vulnerable than their white counterparts,” he said.

Apart from the group of upcoming Africans, dubbed the “Blackoisie”, the challenge remained to uplift the majority of blacks, still mired in poverty mainly as a legacy of apartheid.

Said Van der Berg: “The middle class is opening up and being deracialised but the poverty is not being deracialised.” - AFP

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