Johannesburg - Vehicle manufacturers should guard against unfounded confidence about their prospects for 2010, as the local economy is weaker than many people may think.
This was the opinion of Investment Solutions economist Chris Hart, after the release of new vehicle sales figures for December.
Sales dropped 7.2% year-on-year to 30 478 units for the month, according to the National Association of Automobile Manufacturers of South Africa (Naamsa). Over 2009, sales fell by 25.9% to 395 230 vehicles, compared to the 533 387 units sold during 2008.
"The economy is a lot weaker than some people are suggesting - we have to be really careful," said Hart on Friday, arguing that one would have expected December's year-on-year sales to show an uptick based on several rate cuts amounting to five percentage points since late 2008.
"The motor vehicle industry is in deep recession and has been for three years," said Hart. "It is reflecting the distress of the South African economy."
Naamsa has predicted growth of 6.5% for the new car market and 8% for both light commercial vehicles and trucks.
The 2010 Fifa World Cup may prove to be a boon for the local industry, as rental groups are likely to boost their fleets, said Hart. Also, an expected increase in the uptake of credit will support sales.
- Fin24.com