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South African Vehicle Sales Recorded Third Consecutive Annual Rise
Apr 16, 2010

The South African automobile industry recorded third consecutive annual increase in March 2010 on improved consumer confidence and business conditions.

According to the National Association of Automobile Manufacturers (NAAMSA), the total new vehicle sales in South Africa recorded third consecutive annual increase in March 2010. This indicates to a general resurgence in consumer demand following the recession that hit the economy last year, as per the news published by Reuters.

The automobile industry recorded year-on-year increase of 20.07% from 36,305 Units in March 2009 to 43,591 Units in the same month this year (2010). After the deduction of sales from Amalgamated Automobile Distributors and Associated Motor Holdings, the recalculated increase was 14.9% to 38,293 Units as compared with the same month in 2009.

The total industry sales for Q1 increased at 18.7% year-on-year, which is one of the best starts to a calendar to date (Q1 2010) despite low base, according to the NAAMSA.

Such a remarkable growth in the first quarter of 2010 is accredited to the recovery of economy and considerable improvement of both consumer confidence and business. A decline of 1.1% in the real annual rise of new vehicles prices and offer of more lucrative trade-in prices (due to prevailing shortage of used cars stock) have raised the vehicle affordability.

In March 2010, the Reserve Bank slashed its repo rate to 6.5% by 50 basis points, which also contributed to the rise in sales during March. Between December 2008 and August 2009, the Bank reduced the repo rate by 5 percentage points to simulate growth following the global and local demand pushing the economy to its first downturn in almost two decades.

The prospect for the country’s vehicle industry seems bright in future because of the revival of sales over the first three months of 2010. This signaled that the industry was moving into the growth mode. The industry is expected to grow 12%-15% this year.

According to a Research Analyst at RNCOS “To experience further growth, the domestic market should be given support by improving the business confidence and consumer sentiments. The benefits of reduction in interest rates and lower inflation in the coming months will also give impetus to the automobile industry.”

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