New vehicle sales, exports and production in the motor industry reached record highs in 2005, establishing South Africa as one of the best-performing markets globally and giving the Eastern Cape economy a huge boost.

And while industry group Naamsa is predicting reduced growth this year, a number of factors could work together to push sales even higher.

Figures issued by Naamsa yesterday show a phenomenal 25,7 per cent (115 424 units) increase over the previous year, with sales of 565 018 vehicles.

This strong growth is on the back of 2004’s record sales of 449 594, which were the highest since 1981.

The exceptional year was topped in December by record monthly sales of 45 814 vehicles, almost 10 000 units more than December, 2004.

The resurgence of the automotive industry is good news for Port Elizabeth, and the Eastern Cape more broadly, as stability and job growth have ensued.

The two major manufacturers in Nelson Mandela Bay – Volkswagen and General Motors – both strengthened their positions in the market. VWSA unseated traditional rival Toyota as the leading passenger brand, selling 90 998 units against the Japanese car maker’s 77 288.

GMSA managed to expand its share of the total market to13,6% from 12,2% the previous year.

The company expects to further consolidate its position with an eye on South Africa hosting the Soccer World Cup.

“We expect that preparations ahead of the 2010 World Cup will become an increasingly important economic stimulant and driver,” said GMSA director of sales and marketing Malcolm Gauld.

He said this was particularly true of the automotive industry, which would benefit from demand for commercial and rental vehicles.

On the job front, VWSA communications manager Bill Stephens said yesterday that an additional 1 000 people had been employed by the company over the past 12 months.

GMSA is also expecting to create 450 permanent jobs with its Hummer H3 project, which kicks off this year.

Production output in the year was also much stronger, with 530 000 units produced compared with the 455 000 vehicles the year before.

Naamsa has, however, predicted slower growth this year of between 7% and 10%. It points to consolidation in the market, high household debt levels and expectations of a stable interest-rate environment as limiting factors.

Local motor industry economist Dr Neal Bruton agrees that some consolidation is to be expected, but he also points out that recent economic stability and a cash-flush National Treasury could result in further personal tax cuts this year.

His projection for the year is growth of between 5% and 10%.

VWSA sales and marketing general manager Mike Glendinning said: “While growth rates may slow somewhat, in the absence of any unexpected negative developments, 2006 looks set to deliver another year of buoyant economic circumstances and increasing prosperity for the country.”

The industry’s export drive also moved into top gear, growing to 144 400 units from 110 507 in 2004.

“The export growth momentum should continue through 2006 and is principally attributable to contractual arrangements with multinational automotive corporations as well as the Motor Industry Development Programme,” Naamsa said.

The healthy state of the industry has helped stabilise the economy, although storm clouds in the US – with Ford and General Motors struggling to regain diminishing market share – could pose a very real threat to the South African industry.