Naamsa sees 2011 car boom

Domestic new car sales in 2011 could be significantly higher than last year, the National Association of Automobile Manufacturers of SA (Naamsa) said on Tuesday.

"The new car market for 2011 was expected to show an improvement of between 16 percent and 18 percent, in volume terms, on the 2010 figures," Naamsa said in its quarterly review of business conditions submitted to the department of trade and industry.

The improved sales were partly a result of numerous new vehicle models, the improved finances of consumers given the relatively low interest rates, and improved vehicle affordability.

In the third quarter 106,048 new cars were sold. This was an improvement of 13,331 units compared to the 92,717 new cars sold during the corresponding quarter of 2010.

Some 45,404 new industry commercial vehicles were sold during the third quarter of this year. This was an improvement of 8659 units compared to the same period last year.

"All sectors registered strong growth compared to the corresponding quarter of 2010 as well as fairly good gains relative to the second quarter of 2011," Naamsa said.

"However, sales during the third quarter last year were affected by industrial action, accounting for a lower base during last year's quarter."

Naamsa expected domestic sales to continue to grow over the medium term, but at a more subdued rate in line with the performance of the South African economy. Vehicle exports would depend on the state of the global economy.

"The direction of the global economy remained uncertain and international financial markets were characterised by extreme volatility and turbulence," Naamsa said.

"Prospects of slower global growth, particularly in developed economies, could impact on industry export sales."

There was a shortage of imported parts for the vehicle manufacturing industry in South Africa in the third quarter of 2011 due to the earthquake and tsunami in Japan in March.

"The disruption caused by the events in Japan, compounded more recently by the unprecedented flooding in Thailand, will result in multinational automotive corporations reviewing the design of their respective supply chains, especially in relation to risk," Naamsa said.

It said the industry's competitiveness was being negatively affected by above-inflation wage agreements and sharply increasing electricity prices.