Vehicle sales recovery likely towards year end

The association said that lower interest rates on the back of declining inflationary pressures and an improvement in the financial position of consumers were expected to contribute to a modest improvement in new vehicle sales towards the end of the year.

NAAMSA said that 2009 would be an extremely difficult year for the entire South African automotive industry.

It said that all sectors of the South African automotive industry retail, auto parts manufacturing and vehicle production continued to experience severe and unprecedented viability challenges.

The association said that the operating environment in all three sectors of the industry, during the first few months of 2009, had continued to deteriorate substantially and was only expected to show modest improvement, domestically, during the second half of the current year and, internationally, once the severe global financial and economic crisis dissipates.

"Improvement in the domestic environment is dependent on a revival in consumer expenditure, lower inflation, aggressive interest rate reduction and fiscal stimulation," it said.

"Internationally, any improvement is dependent on a return of confidence and the stabilisation of financial institutions and markets. This is only likely to occur in 2010," said NAAMSA.

It noted that the industry's contribution to South Africa's GDP during 2008 increased to 7.29% from 6.79% in 2007. During 2008, South Africa's share of global production increased to 0.80%, up from 0.73% in 2007.

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