South African Vehicle Sales Climb 37% as Low Interest Rates Spur Spending

South African vehicle sales surged an annual 37 percent in August as interest rates near a 30 year low spurred consumer spending, an industry group said.

Vehicle sales rose to 46,377 last month, the Pretoria-based National Association of Automobile Manufacturers of South Africa said in an e-mailed statement today. The figures include sales from carmakers that aren’t members of the association.

The Reserve Bank has cut its benchmark interest rate seven times to 6.5 percent since December 2008, most recently lowering it by half a point in March. Inflation slowed to a four-year low of 3.7 percent in July, increasing speculation the bank may reduce the rate again on Sept. 2.

“The 5 1/2 percent decline in interest rates since end 2008, stable new vehicle prices, continuing improvements in loan finance approval rates and pent up replacement demand has continued to support the new car market,” the association said.

Passenger car sales climbed 50 percent to 33,541 in August from a year ago as consumers bought vehicles ahead of the imposition of a carbon emissions tax from Sept. 1 and demand from car-rental agencies increased, the association said.

An eight-day strike over pay last month cut export sales, which fell 16 percent to 19,603 in August from the previous month, the association said. Compared with a year ago, exports more than doubled as sales rebounded from last year’s global recession.

The strike that shut plants owned by General Motors Co., Toyota Motors Corp. and other carmakers, ended on Aug. 20 after employers agreed to raise wages by 10 percent. That has been followed by a strike yesterday by workers at car-parts manufacturers, which shut Volkswagen AG’s factory in Port Elizabeth.

“The effect of the ongoing strike action will undermine and compromise the industry’s already fragile track record as a reliable supplier of automotive products, vehicles and components, to international markets,” the association said today.

To contact the reporters on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net

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