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South Africa ? Automobile Industry to Witness Good Recovery in 2010
Mar 08, 2010

2010 is expected to bring good results for the South African automobile industry as growth is projected in all the departments, namely, production, sales and exports.

National Association of Automobile Manufacturers (Naamsa) has projected the new vehicle sales in South Africa to increase by nearly 7% in 2010 to 424,000 Units after witnessing a sharp decline in 2009 and recording sales of just 395,222 Units - the lowest level recorded since 2002, reported Engineering News.

Production of motor vehicles in the country is likely to increase around 17% in 2010 to 445,000 Units from the level of 380,000 Units in 2009. There are positive projections for automobile exports too, which are expected to reach 221,000 Units against previous year’s 174,947 Units.

As far as the most recent statistics are concerned, automobile sales in South Africa reached 39,312 Units in February 2010 as compared to 32,613 Units in February 2009.

No doubt global economic turmoil affected the South African economy in the worst possible manner, with automotive sector being the most severely affected. But now the sector appears to be heading towards better achieving a moderately domestic sales scenario in 2010. The continuously improving demand in export markets will also lead to higher production levels during the year.

Apart from this, the moderate improvement projected for new vehicle sales will be driven by the improvement in the financial position of consumers and lower interest rates due to declining inflationary pressures.

The FIFA World Cup 2010, to be held in South Africa, is expected to contribute significantly in boosting public transport network, thereby favoring the industry’s growth. It is also expected to fuel demand in the car rental industry.

In addition to this, strong rand will also help the automobile industry. It is noted that price inflation on new cars in the country fell to an average of 8.7% in the fourth quarter of 2009 on the back of strong rand. As price of automobiles are not expected to rise in the near term, the aforementioned scenario will continue to support the industry in 2010 also.

According to a Research Analyst at RNCOS, “With the automobile industry achieving the expected growth in 2010, all the other related sectors are also likely to thrive. Industries supplying goods to automobile manufacturers, like leather, glass and steel industries, as well as several engineering industries will be the beneficiaries. This will also lead to the growth of small scale industries.”

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