South Africa's auto-industry catches swine flu - and thank heaven for that

SHOOT: In 2006 almost half a million vehicles were added to our roads. Ever wonder what the implications are of adding 500 000 cars every year to the same road network? Traffic jams, car accidents, potholes, pollution. Would you agree that it is in our best interest to try to CURB demand for cars, not to encourage it. More public transport please, more walkable community environments. Fewer cars, fewer noise, less expense associated with the motoring lifestyle

FIN24: Interest rates are now effectively at the same low levels they were in 2006. However, the structural characteristics of the economy have changed.

The National Credit Act was implemented in June 2007, which forced retail banks to apply stricter lending criteria. "Further inflation is a much bigger concern now than what it was back then. Households also have much higher levels of debt," said Mercier.

An example of structural change in the economy would involve real economic growth leading to urbanisation, which would in turn increase demand for cars.

clipped from www.fin24.com Sales for the three months to August 2009 fell 11.6% compared to the same period last year, which reaffirmed trends showing that the country's demand for cars had stabilised at low levels. Industry representatives agree that a meaningful recovery in demand for new cars, which took a nosedive in late 2008, will take place in the first half of 2010. However, the industry insists that more interest rate easing is needed at this point. Citi SA chief economist Jean-Francois Mercier said that the 50 basis-point cut, which may or may not happen later this year, is fairly insignificant in the greater scheme of things. He added it would take a few years for the automotive market to return to levels seen in 2006. The industry sold a record of 481 558 new passenger vehicles in 2006, according to the National Automotive Association of South Africa (Naamsa). The projected sales number of new passenger vehicles for 2009 is 275 000 units.