An explosion in car sales has attracted black-owned investment company Sekunjalo Investments into the vehicle sector, with the company buying stakes in lucrative car dealerships including East London’s Ronnie’s Motors, the company reported yesterday.

“We’re launching a pincer attack on the vehicle sales market by entering both the top-end luxury market and the affordable end of the market simultaneously,” said Sekunjalo deputy CEO Norman Noland.

Through its wholly-owned subsidiary, Sekunjalo Motor Holdings, the group bought 10% of the Eastern Cape’s largest DaimlerChrysler dealership, Ronnie’s Motors, as well as 30% of the Mowbray TATA dealership in the Western Cape.

Ronnie’s Motors was established in 1948 and now has branches in East London and King William’s Town. The dealership specialises in Mercedes-Benz, Chrysler, Jeep, Dodge and Mitshubishi. It also has used car and commercial vehicle divisions.

The TATA franchise has the licence to sell passenger and light commercial vehicles at the lower end of the market.

Tony Cotterell of Ronnie’s Motors said the investment by Sekunjalo would boost the group’s broad-based black empowerment profile and thus present significant opportunities for future growth.

Noland said that the automotive sector was an appealing investment for three key reasons. Firstly, it has been identified by government’s accelerated and shared growth initiative as a priority sector for economic growth. Secondly, there were opportunities to cross-sell related products originated by Sekunjalo’s other divisions, such as its finance products; and thirdly, “simply because of South Africa’s love affair with the motor car”.

Insufficient public transport and “the growth in vehicle sales (which) is mirroring the emergence of a growing middle class in South Africa” made it a good time to invest in the sector, said Noland.

The National Association of Automobile Manufacturers of South Africa (Naamsa) yesterday reported that new vehicle sales jumped just over 20% in the year to July, compared to July 2005.

“The industry remained on target to achieve record sales for the third year in succession,” Naamsa said, despite the expectation of further interest rate hikes this year. The Reserve Bank is expected to raise rates by at least half a percent later today following its two-day Monetary Policy Committee meeting.

Industry players said the rise in sales could be a result of car buyers purchasing now before rate hikes made financing “prohibitive” as well as worries that future rand weakness could make cars more costly.

McCarthy Motor Holdings chairman Brand Pretorius said the market was continuing to show signs of a gradual slowdown. “When looking just at the Naamsa results, July’s sales performance was almost a percent weaker than the sales recorded during June, even though July had a half day more in which to sell vehicles,” he said. — With I-Net Bridge