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South Africa Auto Industry Returning to Growth Track
Nov 23, 2009

New vehicles sales are gradually rebounding in South Africa, mainly on the back of demand from car rental companies.
 
According to the statement of the National Association of Automobile Manufacturers of SA (NAAMSA), sales of new vehicles grew in South Africa in the third quarter of 2009, which was for the first time since 2008, proving that the sales had bottomed out in the second quarter of 2009, reported Business Day.
 
There was an improvement in sales of new cars during September-October 2009, largely due to demand from car rental companies, stated NAAMSA. Highlighting this sign of improvement, NAAMSA said that it has projected new vehicle sales to surge 8% in 2010 and 9% in 2011. However, in the meantime, the association has warned that any anticipated improvement over the short to medium term is likely to remain sluggish and gradual, off a traditional low base.
 
The economic recession has by large affected all the segments of the South African auto industry, be it retail, vehicle production, or manufacture of auto components, due to unprecedented decline in automobile demand. The association further added that the industry is right now believed to be in the process of overcoming the impacts of a severe recession. NAAMSA anticipates projected capital spending by local auto industry to reach R367 Billion in 2009 from R328 Billion in 2008.
 
Apart from domestic sales, exports have also been appearing to rebound over the last two months (September and October 2009). It is noted that as compared to the first nine months of 2008, exports were 45% down during the same period in 2009. Although NAAMSA anticipates the figures to depict a moderate upward trend in the coming months, uncertainties persist regarding the sustainability of any revival in global markets.
 
According to a Research Analyst at RNCOS, “Despite consumer fundamentals remaining under pressure, indications of improvement in certain areas definitely exist, including strong increase in Purchasing Managers Index (PMI). While the market seems to have started showing stability levels, the auto industry of South Africa has to wait till a significant growth comes across its way.”
 
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