New car sales hit record low

New vehicle sales in February plunged to their lowest level in more than two decades - further evidence that South Africa's economy is buckling under the global economic crisis.

New vehicle sales in February plunged to their lowest level in more than two decades - further evidence that South Africa's economy is buckling under the global economic crisis.

The National Association of Automobile Manufacturers (NAAMSA) said yesterday sales fell by 36,3percent to 29471 units, compared with the same month a year ago. Total sales were the lowest for February in six years.

With sales from Associated Motor Holdings, which reports separately, total sales fell to 32566 vehicles from 50560 sold the same month last year.

Sales of passenger cars declined by 34,1percent, while light commercial and truck sales, which have been fairing better until now, dropped 40percent and 36,4percent, respectively.

New vehicle sales have now been in decline for more than two years.

The figures add to a series of data releases that paint a bleak picture of the economy and back the case for an inter-meeting interest rate cut, especially with inflation slowing.

Economic growth contracted by 1,8percent in the fourth quarter of 2008, the first decline in a decade, with manufacturers the hardest hit by recession in major trading partners.

The sector shrunk by 21,8percent in the fourth quarter, while a 25percent fall in exports in January and a record low for the purchasing managers index in February, point to more woes and put South Africa on the road to its first recession in 17 years.

The motor industry - one of the biggest in manufacturing and key for employment - has been particularly badly hurt, prompting it to appeal to government for a R10billion rescue package.

NAAMSA said any improvement in sales was dependent on a revival in consumer spending, possibly sparked by slowing inflation, lower interest rates and stimulatory government spending. - Reuters

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