The vehicle manufacturing industry is expecting sales growth to slow as the second half of 2011 looks set to be more difficult than the first, the National Association of Automobile Manufacturers of SA (Naamsa) said on Tuesday.
“In the short to medium term, a number of unfavourable developments will impact on demand for and sales of new motor vehicles,” Naamsa said in its quarterly review of business conditions submitted to the department of trade and industry.
“Sharp increases in manufacturing input costs, including electricity and labour, without proportional increases in productivity continue to pressurise component and vehicle manufacturing.”
Naamsa said the industry would be affected by the uncertainty of the global economy and the turbulent financial markets, and this could have an impact on future export sales.
“Domestic sales will probably continue to show growth but at a more subdued rate,” Naamsa said.
In the second quarter of 2011, there were signs of a slowdown in growth in the new car, light and medium commercial vehicle segments. However, Naamsa said the entry level segment of new car sales remained strong.The heavy and extra-heavy truck segments also showed robust growth.
During the quarter under review, the high number of public holidays in April and isolated component shortages as a result of the earthquake in Japan resulted in some production delays.
Aggregate employment in the industry declined by a marginal 0.3% from the first to the second quarter, to 28 085 jobs.
Naamsa said purchasing managers’ indices in most major economies had been falling sharply, indicating a loss of economic momentum over the medium term.
“South Africa, with its relatively open economy, will be affected by any slowdown in world economies and consumer spending in South Africa is also likely to decrease in future,” Naamsa said.