Commercial Vehicles Boost S.Africa March Sales

South African new vehicle sales increased by three percent from a year earlier in March.

South African new vehicle sales increased by three percent from a year earlier in March, with the government's investment drive boosting commercial vehicle sales despite a lagging passenger car market.

The National Association of Automobile Manufacturers (NAAMSA) said on Tuesday it sold 57,899 units in the period. Including sales from Associated Motor Holdings -- incorporated for the first time from 2007 -- total sales were 64,071.

NAAMSA said the new car market was showing signs of increased pressure while the new commercial vehicle sales recorded further improvement.

"The sales figures provided further evidence that consumer demand had continued to adjust to last year's interest rate rises and recent car price increases," NAAMSA said in a statement.

"These factors, together with continued high personal debt levels, were clearly beginning to impact on consumer spending and new car purchasing," it said.

The central bank hiked interest rates by two percentage points from June last year to curb runaway spending which it said was fuelling inflation.

Household debt currently stands at a record high of 73.3 percent of disposable income as consumers have used historically low rates to get into debt, while savings are at record lows.

Vehicle sales are feeling the effects because for the second consecutive month in just under four years, the comparison of monthly car sales with the same month of the previous year has been negative, NAAMSA said.

On the back of continued high levels of economic activity, sales of new light commercial vehicles, light trucks and minibuses showed a 15.9 percent rise in the period.

"Supported by strong investment sentiment and infrastructural spending, sales of vehicles in the medium and heavy truck segments of the industry continued to reflect strong upward momentum," said NAAMSA.

Sales of medium commercials increased by 12 percent and of heavy trucks and buses by 28.8 percent .

South Africa is embarking on a multi-billion dollar investment drive in infrastructure to boost economic growth.

NAAMSA said the industry's performance for the year would depend on the direction of interest rates and the economy.