2010 to bring ‘modest’ rise in car sales

There were signs of hope in the South African automotive sector for modestly better domestic sales in 2010, the National Association of Automobile Manufacturers (Naamsa) said on Friday.

It also forecast higher levels of production on the back of continued recovery in demand in export markets.

“Given the close correlation between the performance of the South African economy and international financial and economic trends, uncertainties about the medium term direction of the global economy made forecasting difficult,” Naamsa added.

Naamsa said although the local economy had officially moved out of recession, economic activity levels remained relatively subdued with a severe contraction in private sector credit demand and
continued steps by corporations and households to reduce debt.

“Much would depend on further improvement in consumer sentiment and business confidence.”

In this regard, the cumulative 5% decline in interest
rates between end 2008 and August 2009 should improve the financial position of households and contribute towards an underlying improvement in the growth of vehicle sales in coming months, Naamsa said.

Moreover, the Soccer World Cup event would boost demand by the car rental industry, promote tourism and spending and support further economic recovery, it added.

“Also reduced cost pressures on the back of the exceptionally strong rand should facilitate stable new vehicle pricing for some time.”

At this stage, projections for 2010 for the new car market indicated growth of about 6,5%, the light commercial vehicle market by about 8% and sales of medium and heavy trucks and buses also by about 8% in volume terms, Naamsa said.

“In aggregate terms, domestic sales are expected to improve from the 395 000 in 2009 to about 423 000 in 2010 — an increase of 7% … however, the improvement will be off a very low
base.”


Factoring in the expected modest improvement in domestic sales together with the fairly substantial anticipated growth in exports, domestic production of motor vehicles in South Africa during 2010 was expected to rise from the approximately 380 000 vehicles produced in 2009 to about 445 000 units projected for 2010 — an increase in vehicle production of about 17%, Naamsa added. – Sapa

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