Car industry to pick up speed

Johannesburg - South African new vehicle sales should rise by around 7% this year after declining sharply to their lowest level since 2002 last year, car makers said on Monday.

The National Association of Automobile Manufacturers (Naamsa) projected sales to rise to 424 000 units in 2010 and 459 000 in 2011, up from 395 222 last year.

Exports were also seen higher at 221 000 vehicles compared with 174 947 previously.

South Africa's auto sector was one of the hardest hit by a global downturn and domestic recession but is showing signs the worst now many be over for the key employment industry - monthly sales data showed the first year-on-year increase in almost 3 years in January.

"New car and commercial vehicle sales (are) projected to improve in 2010," Naamsa said in a quarterly review.

"Expected improved economic activity levels, the benefit of lower interest rates on the back of declining inflationary pressures and an improvement in the financial position of consumers should contribute to a modest improvement in new vehicle sales."

South Africa's government sees auto manufacturing as a key industry to help boost growth and jobs and has tried to help the carmakers to build up exports.

Africa's biggest economy shed nearly 900 000 jobs during last year's recession, more than 200 000 of them in the manufacturing sector.

Naamsa data showed exports fell nearly 40% last year compared with the record 284 211 vehicles shipped in 2008.

The total number of locally produced vehicles tumbled to 373 923 units last year from 562 965 the year before, but should pick up again in 2010 to about 434 000, it said.

Car makers BMW, Ford, General Motors , Daimler, Nissan Motor Co. Ltd, Toyota Motor Corp. and Volkswagen all have manufacturing plants in South Africa.

- Reuters