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'Car sales to recover by 2014'

2009-01-29 08:08

Riana de Lange

Port Elizabeth - New vehicle sales in South Africa will again reach 2008's level of 489 000 units only by 2014, which number is dramatically below 2007's 613 000 units, says Steve Koch, president and managing director of General Motors South Africa (GMSA).

For this year he expects sales of 400 000 through the National Association of Automobile Manufacturers of South Africa (Naamsa), with a modest uptick to about 410 000 in 2010.

Koch bases these estimates on the global economic situation. The domestic industry can grow only as the world's economy grows. The latter has still, however, much to digest and will take long to recover.

He believes South Africa has yet to feel the full impact of the global crisis. Job losses and a general slowdown in economic activity could characterise 2009.

Suppliers to the vehicle manufacturers are among those being worst affected, says Koch. Manufacturers reducing staff and cutting costs as much as possible will have an effect on suppliers.

It's to be hoped that few enterprises will have to close their doors, but people will unfortunately lose jobs.

He does not believe government can do much to stimulate activity in the motor industry. Even something like tax relief when locally manufactured vehicles are bought will make little difference. An interest-rate cut of three percentage points would be needed to bring about revival in the vehicle market, because unavoidable increases in vehicle prices are now keeping car payments high. The only solution is for manufacturers and suppliers to save on costs and be as competitive as possible.

Apart from about 1 000 GMSA workers accepting voluntary retrenchment packages last year, stock levels have been reduced from about 12 000 vehicles in June 2008 to the fewer than 3 000 units warehoused in December.

No GMSA salaried staff will receive increases in March, in the wake of the company's 2008 performance. If GMSA's production of the Hummer ceases, and these volumes are not made up by a different product range, jobs will be on the line.

Greater clarity about the Hummer's future should be evident by the end of March.

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