/ 2 February 2010

Sales of new vehicles rise, recovery seen

South Africa’s new vehicle sales rose in the year to January, the first annual increase in 33 months, marking a turnaround in a sector hit by depressed demand because of the weak economy.

The National Association of Automobile Manufacturers (Naamsa) said on Tuesday that January sales were up by 5 112 units, or 15,5%, at 38 075, rising from a low base in January 2009 when sales hit an eight-year low for that month.

After stripping out sales by Associated Motor Holdings and Amalgamated Automobile Distributors — which report separately — sales of all types of vehicle rose last month by 12% from the same month a year ago to 34 113 units, Naamsa said.

“The welcome improvement … should be seen in the context of the extremely depressed and low base in January last year characterised, at the time, by a sharp decline in demand as a result of the impact of the global economic and financial crisis,” Naamsa said in a statement.

“The cumulative five percentage point decline in interest rates between end 2008 and August 2009 should contribute to an improvement in the financial position of households and businesses and stimulate demand for new vehicles.”

The 2010 Soccer World Cup to be hosted by South Africa in June should also boost demand by the car rental industry, while a recovery in the economy after last year’s recession should also boost sales.

“Aggregate domestic sales could increase by between 7% and 10%,” the automobile body said, adding, however, that the improvement would be from a very low base.

New vehicle sales in Africa’s biggest economy fell by 25,9% in 2009 to their lowest level since 2003 as consumers grappled with high debt levels and rising unemployment after the first recession in nearly two decades slashed a million jobs.

South Africa emerged from recession in the third quarter of 2009, when it grew by an annualised 0,9% after three quarters of contraction.

Naamsa said there were also clear signs of a revival in demand for South Africa-made motor vehicles in foreign markets, with manufacturers’ projections suggesting export sales could grow by about 32% in 2010. — Reuters