South Africa’s new vehicle sales reportedly rose by almost a fifth in the first half of 2004, official data showed, firmly on track to record the highest full-year volume since 1983.

According to Reuters, the National Association of Automobile Manufacturers of South Africa (Naamsa) said in a statement that sales in the first six months of this year climbed 19.6% to 206,046 units compared to the same period in 2003.

June sales were up 27.3% at 38,188 units compared to the same period last year – the highest single month’s sales reported by Naamsa since October 1996, the report noted.

Vehicle sales are one of the leading indicators of domestic economic growth in South Africa, and the motor sector is one of the country’s largest industrial employers, Reuters said.

Manufacturers reportedly attributed the strong sales to the fact that June traditionally marks the start of the rental car buying season.

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“But it is significant that the market is now being led by the private sector with support from business and government purchases, which is a departure from the trend in recent years,” Johan van Zyl, CEO of Toyota South Africa, told the news agency.

“Based on half year sales of 206,046 units, the vehicle market is heading for a bumper year with sales well over 400,000 vehicles projected for the full year. We have to go back as far as 1983 to find sales over 400,000 in a single year.”

Reuters said sales have been buoyed by steady lending rates, which were cut last year by 5.5% to 11.5% – a 22-year low.

Sustained rand strength had helped to restrain price increases, manufacturers told the news agency – the currency has gained nearly 8% against the dollar so far this year after appreciating 28% in 2003 and has firmed 1.4% on a trade-weighted basis.

“Due to the strength of the rand, it is likely that vehicle price stability will prevail. Interest rates should remain at current levels, or, at worst, increase by 0.5%,” Brand Pretorius, chairman of McCarthy Motor Holdings, told Reuters.

“Major new product launches, which are imminent, will entice customers into the market.”

But Reuters noted that manufacturers and dealers are concerned about a possible strike by auto workers demanding a 9% salary increase – above the official 3% to 6% inflation target range. Auto workers traditionally go on strike in July.

“Extended strike action will affect sales, as new vehicle stock levels are already low,” Pretorius told Reuters, adding: “One would hope that a settlement will be reached, as a strike would also undermine the motor industry’s export platform over both the short and medium term. That is a situation our country can ill afford.”

Previous strikes forced some companies with big export contracts to scale down delivery targets or switch part of the production overseas, the news agency noted.

Autos make up 12.8% of South Africa’s total exports. The sector – the country’s third largest – contributed 6.3% of gross domestic product (GDP) in 2002, Reuters said.