South African car sales continue slide in May

JOHANNESBURG – South African new vehicle sales slid 32,9 per cent year-on-year in May, an improvement on April when they dived a record 44 per cent, partly due to extra public holidays during that month.

Total sales dropped to 28 972 units last month, the National Association of Automobile Manufacturers (NAAMSA) said on Tuesday, as consumers cut back on spending in the country’s first recession in nearly two decades.Stripping out data from Associated Motor Holdings, which reports separately, sales fell 34,7 per cent to 25 819 units.NAAMSA said prospects for the rest of the year were poor, with a recovery dependent on a revival in consumer spending, spurred by interest rate cuts. ‘2009 will represent an extremely difficult year for the entire South African automotive industry,’ it said in a statement.’All sectors of the industry, vehicle retail, auto parts manufacturing and vehicle production, continue to experience severe and unprecedented viability challenges.’Sales from the auto industry – one of the biggest in the country’s manufacturing sector and a key employer – have fallen every month since April 2007 as households struggle with high debt levels and as job losses increase.The central bank has cut its repo rate by 450 basis points to 7,5 per cent since December to try to revive the economy, despite relatively high inflation. The largest metalworkers’ union has threatened strikes if rates are not cut further.Data last month showed Africa’s largest economy suffered its biggest contraction in 25 years, with miners and manufacturers particularly hard hit by the global downturn that has slashed demand for exports. NAAMSA said industry exports, which had built up rapidly over the past three years, were down 41,3 per cent in May at 13 612 vehicles.’Reduced demand in South Africa’s major export markets – Eurozone, Japan and the United States – would translate into further declines in the number of vehicles exported by the industry during calendar 2009,’ NAAMSA said.It said total industry sales were down 35,8 per cent at 157 141 for the year to the end of May compared with 244 670 units for the same period last year.-Nampa-Reuters