/ 4 October 2010

Strikes slow SA vehicle sales growth

The rate of growth in sales of vehicles produced in South Africa slowed sharply in September, hit by a drop in exports and by strikes that affected output.

The stoppages compromised the already fragile track record of what is the country’s premier manufacturing sector as a supplier of cars, vans and components to international markets, the National Association of Automobile Manufactures (Naamsa) said on Monday.

New vehicle sales increased by 16,6% year-on-year in September to 41 875 units, Naamsa said, down from growth of 36,9% in August. It said a new emissions tax would likely further slow the rate of growth in car sales in coming months.

“New vehicle sales … lost considerable momentum during the month principally due to strike action in the motor industry which negatively affected the production of locally manufactured cars and light commercial vehicles,” the industry body said.

Exports of South African-produced vehicles fell 10,3% to 12 530 compared with the same month last year, and were down 36,1% from August.

The vehicle industry is the largest in South Africa’s manufacturing sector, and has been recovering steadily this year after more than two years of decline due to high borrowing costs and a global and domestic downturn.

Industry data shows vehicle sales fell by 25,9% to 395 230 units in 2009, the lowest annual level since 2003.

The relatively low September increase also adds to the case for another interest rate cut next month, on top of 600 basis points of reductions implemented between December 2008 and September this year to boost the domestic economy, still struggling after last year’s recession.

“The … decline in interest rates since end 2008, stable new vehicle prices, further improvement in loan finance approval rates and pent up replacement demand should continue to support … new vehicle sales,” Naamsa said.

It added that growth in new passenger car sales should moderate further in the months ahead as the market adjusts to the inflationary effects of a new car emissions tax regime.

Stripping out sales from Associated Motor Holdings and Amalgamated Automobile Distributors — which report separately — September sales rose by 10,7% to 35 097 units compared with last year. – Reuters