CAPE TOWN: South Africa’s automotive sector, the country’s largest manufacturing industry, expects a slight increase in new vehicles sales this year as economic growth gains pace thanks to commodity price rises and a recovery in farming. New vehicle sales are expected to rise by 2.5% to 3.5% in 2017, Nico Vermeulen, director of the National Association of Automobile Manufacturers of South Africa, told Reuters. The increase follows three successive years of decline and a drop of 11.4% in 2016 to 547,442 units.
“As the economy starts to show signs of life and interest rates remain stable for the foreseeable future, the market will develop some traction in the second half of the year,” Vermeulen said. He said the industry’s sales growth projections were based on an assumption of economic growth of over 1% this year in Africa’s most industrialised economy. Last October South Africa’s Treasury forecast growth of 0.5% in 2016, accelerating to 1.3% in 2017. The country is recovering from its worst drought in history which wilted crops and stoked food inflation. Slower inflation will help the economy this year along with higher commodity prices, although worries about low investment rates and the political environment continue to weigh.