S.Africa's new vehicle sales up on car emissions tax

JOHANNESBURG, (Reuters)

South Africa's new vehicle sales jumped by 36.9 percent on a yearly basis in August, partly boosted by pre-emptive buying ahead of a tax on new cars, while strikes in the sector had weighed on exports.

Africa's largest economy introduced a tax on new cars for carbon dioxide emission to help control environmental challenges. The National Association of Automobile Manufactures of South Africa (NAAMSA) said on Thursday consumers bought aggressively in August to try and avoid the tax effected on Sept. 1.

Total industry new vehicle sales increased by 12,502 units compared to the same period a year ago, NAAMSA said. The industry however saw growth in the sector moderating for the remainder of 2010, with the expansion rate in new car sales expected to decline, partly on the effects of the new tax.

Another concern was the impact of labour strikes in the sector during the second half of the month, which saw vehicle exports fall 15.7 percent month-on-month in August.

Workers in the industry's components sector began another strike on Wednesday, demanding a 20 percent wage increase -- five times the inflation rate of 3.7 percent in July.

"Further production disruption (is) currently being experienced at most of the plants ... the effect of the ongoing strike action (will) compromise the industry's already fragile track record as a reliable supplier of automotive products to international markets," NAAMSA said.

It said a prolonged strike could also translate into job losses. In the long term, the outlook for growth within the sector remained cloudy and was largely dependent on global factors and domestic interest rates.

The central bank has left is key repo rate steady at a three-decade-low of 6.5 percent at its last two policy meetings, after a 550 basis points cycle of cuts between December 2008 and March 2010. The market has priced in a cut at the next meeting on Sept. 8-9, as economic recovery stutters after last year's recession.