A boost to sales
The massive trade deficit in the vehicle industry is expected to be wiped out this year and perhaps even show a modest surplus.
Exports of fully built-up vehicles and components are expected to nullify last year's R35billion deficit and even produce a small surplus of R3million this year as sales of vehicles reached a record 28269 units in July - up 85percent on the same month last year.
This will be the first time since 1995 that the industry has been in the black.
All three sectors of the market had shown further declines in July, but motor and component manufacturing was largely cushioned from this because of continued demand for the export market. This was probably one of the reasons for the strength in the exchange rate, said the National Association of Automobile Manufacturers of South Africa (Naamsa).
Car sales at 26015 were down 19,1percent on the same month last year, although they were up by 14percent on last month's figures, but are still running at the lowest level for the past four years. July's improvement on June was supported by an increase in sales to rental companies.
Light commercials were down by 23,5percent on July last year to 13164percent, but are down by 12,4percent for the seven months compared with the total market, which has lost about 20percent during the same period.
Medium commercials were down 24,1percent to 1058 and heavy trucks and buses a more modest 6,1percent lower at 2201.
Since the vehicle market began to tumble last year, the heavy truck segment has managed to buck the trend, but now also appears to have succumbed to the factors that are affecting the whole industry.
Significantly, Toyota sold more cars than Volkswagen for the first time in many months, but the sales of both manufacturers were well up on average monthly sales since March.
This is a strong indication that motorists are buying down as interest rates and the petrol price remain high.
In the light commercial sector, the Hilux was again the top seller with the Opel Corsa Utility coming in second and the Toyota Quantum third.
Looking ahead, Brand Pretorius, chairman of the McCarthy Motor Holdings, said sales for the full year could shed about 20percent of sales in 2007.
"This would translate into sales of 540000 units including those from Associated Motor Holdings, which would be 24percent down on sales of 714324 units recorded in 2006."
Buyers, however, will be watching the decision by the Reserve Bank's Monetary Policy Committee next week on which way interest rates will move.