June 30 (Bloomberg) -- Toyota Motor Corp.'s South African unit, owner of the nation's largest-selling car brand, expects industrywide sales to decline by 16 percent this year as higher interest rates and food and fuel prices curb consumer spending.

South Africa's total car sales for 2008 will probably drop to 565,000 vehicles from 676,000 last year, division Chief Executive Officer Johan van Zyl said in a presentation in Johannesburg today. Sales may increase to 575,000 in 2009 and reach 800,000 by 2015, he added.

``It's a tough road ahead,'' Van Zyl said. ``The consumer is starting to feel the pinch. How long it takes to recover depends on the quantum of debt in the economy.''

South African vehicle sales fell by an annual 23 percent in May, the biggest decline in more than nine years, the Pretoria- based National Association of Automobile Manufacturers of South Africa said June 3. The South African Reserve Bank raised its benchmark interest rate by half a percentage point to 11.5 percent on April 10, the fifth increase in less than a year.

An improvement in the country's car market will take longer than the Toyota City, Japan-based company has estimated, Andrew Kirby, the carmaker's head of sales and marketing in South Africa, said in an interview.

``We're now looking at a recovery in the fourth quarter of 2009, when six months ago we thought it could happen in the first quarter of next year,'' Kirby said.

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Toyota, the world's second-biggest carmaker, plans to increase its market share in Africa's largest economy to 24 percent by the end of this year and 27 percent in 2015 from 23 percent in 2007, Van Zyl said. Toyota plans ``soon'' to start selling a medium-sized commercial vehicle, such as a panel van, in a segment where the company has lost market share, he added.

``We've been looking at our commercial-vehicle range and there are gaps we want to fill,'' Van Zyl said. ``This is not only in the medium-commercial vehicle segment, but also our heavy-commercial vehicles.''

The company will raise prices in South Africa tomorrow by about 2.5 percent, following an increase of 1.5 percent in January and 2.4 percent in April, as the rand has fallen against the dollar, raising import costs, Kirby said. ``There will, in all likelihood, be additional increases in the remaining six months of the calendar year.''

Toyota South Africa holds the franchise for importing, manufacturing and distributing Toyota and Hino vehicles and parts in southern Africa. Toyota South Africa also imports and distributes the Lexus luxury brand.

The company plans to produce 200,000 cars this year at its Prospecton plant near Durban on South Africa's east coast, Van Zyl said. Toyota aims to export 147,000 Hilux pickup trucks and Corolla sedans to 40 countries in Europe and Africa.

To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net

Last Updated: June 30, 2008 09:06 EDT