Improved levels of employment during 2003 could boost used-car sales, which in turn would increase automotive part sales, says the retail motor industry organisation (RMI).

Improved levels of employment during 2003 could boost used-car sales, which in turn would increase automotive part sales in 2003, says the retail motor industry organisation (RMI).

It is well documented that 2002 was a tough year for the automotive industry in South Africa due to four interest rate increases during the year, new vehicle price hikes of about 19 per cent and the depreciation of the rand during late 2001 and early 2002.

But, according to the RMI, sales for 2003 are expected to break through the R100 million mark for the first time. These sales include goods and services such as used cars, car parts and repairs, but exclude fuel sales.

"We confidently predict a substantially better 2003 on the economic front after a tough 2002," RMI chief executive Jeff Osborne said yesterday.

During the second quarter last year, the Bureau for Economic Research (BER) recorded a rise in employment figures for first time in six years, reported on Tuesday.

The bureau's spokesman, Pieter Laubscher, said the BER forecast increasingly strong growth in employment in the next few years.

Increases in new car prices would also sway some buyers to purchase used cars, said Osborne. Used car sales were expected to grow by five to six per cent this year.

Higher employment levels meant that more South Africans would start participating in the domestic economy, he added.

Automotive manufacturers earlier this month predicted that the difficult conditions of the last six months of last year would continue for the time being, but improve in the second half of the year.

“Looking ahead to 2003, we anticipate a zero growth market with a total of 350 000 sales for the year. This is based on the fact that sales in 2002 slowed in the second half of the year, due to price increases and interest rate hikes, and we believe this trend will continue for the first six months of 2003,” Toyota SA president Johan van Zyl said earlier this month.

The benefits of an improved economic climate and interest rate cuts were expected to boost sales in the second half the year, he added.

"With both inflation and interest rates expected to ease during the course of 2003, and with further tax cuts expected to be announced during the national budget presentation in February, overall levels of economic growth should also provide a supportive environment for the market during the course of the year,” Volkswagen SA sales and marketing director Jolyon Nash said.

Original article from Car