South Africa: Vehicle sales growth slows to four-year low

Africans at Work. PHOTO/Volkswagen South Africa

(Bloomberg Businessweek)- South African vehicle sales growth will probably ease to the slowest pace since a 2009 recession this year because of a weaker economy, the National Association of Automobile Manufacturers of South Africa (NAAMSA) said.

Sales will rise 4.5 percent to 652,000 this year, slower than the 9 percent expansion in 2012, before accelerating to 7.6 percent next year, the group said in a report today.

Manufacturers are raising prices after the South African rand dropped 14 percent against the dollar this year and consumer spending moderated, it said.

The auto industry accounts for almost 7 percent of South Africa’s gross domestic product (GDP), according to the Department of Trade & Industry. Household spending eased in the first quarter to the slowest pace in four years, limiting overall growth already hampered by industrial action in the mining sector and weak demand for manufactured exports from Europe.

Inflation), which at 5.6 percent in May is close to the top of the central bank’s target of 3 percent to 6 percent, has dampened consumer confidence.

The rand fell 0.1 percent to 9.8377 per US dollar at 1:28 p.m (7:28 AM EDT) in Johannesburg and is the worst performer against the dollar this year of 16 major currencies tracked by Bloomberg.