Boston, MA -- (SBWIRE) -- 03/01/2013 -- Car sales in South Africa rose 1.4% year-on-year (y-o-y), to 55,097, in September 2012, which was the slowest rate since December 2009, according to the National Association of Automobile Manufacturers of South Africa (NAAMSA).

The organisation said that the result reflected 'a significant statistical slowdown in underlying growth momentum', adding that the Marikana mine shootings and rising levels of industrial action in a number of sectors has dented business confidence in the country.

A NAAMSA statement added: 'Looking ahead to 2013, increasing inflationary pressures on the back of expected higher fuel and food prices and the impact of rand weakness on new vehicle pricing were likely to result in a more difficult trading environment and more subdued growth in vehicle sales.'

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This situation was illustrated by a transport workers strike affecting production at General Motors (GM)'s manufacturing plant in the east coast city of Port Elizabeth in October 2012.

Things picked up in October and November, however. South Africa's new car sales saw a rise of 7.3% in November 2012, to 53,134 units, compared with the same period in 2011, according to NAAMSA. NAAMSA said the sales, which were driven by low interest rates and high demand of new vehicle models, were in line to reach a growth target of 10.0% in 2012.

South Africa registered a 10.5% y-o-y increase in new vehicle sales to 57,845 units in October, according to NAAMSA. The 13% rise in new passenger car sales in October came on the back of strong demand from car rental companies, accounting for 18.4% of total sales. New vehicle sales also climbed 10.1% y-o-y in the year-to-date period. However, vehicle exports and production were affected by a nationwide transport sector strike, NAAMSA added. Vehicle exports slipped 3.3% y-o-y to 24,904 vehicles in October.

Despite this growth optimism, we have slightly lowered our sales and production forecasts this quarter, as we did in our Q412 quarterly report. We now estimate sales growth of 10.1% in 2012 (in line with NAAMSA), and a rise of 6.8% in 2013. The annual rate will drop to 5.3% by the end of our forecast period in 2017, when we predict vehicle sales of 833,472.

We now expect production growth to average 4.9%, with 731,194 vehicles produced in 2017. Last quarter we forecast 870,756 units would be produced by the end of our forecast period.

We are also more bearish about commercial vehicle (CV) sales, which we think increased 8.1% in 2012. This is compares with our previous annual forecast of 11.6% and is predicated on our dampened outlook for investment.

This is not to say there is no room for optimism about South Africa's auto industry. BMI believes cuts in interest rates coupled with a move by the car rental sector to renew fleets should ensure that new car sales growth is sustained for the rest of 2012 and into 2013.

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