The new vehicle market is geared for one of the best years since the ‘80s with an expected capital investment of more than 50 per cent, according to Naamsa’s quarterly review of the motor manufacturing industry.

The new vehicle market is geared for one of the best years since the ‘80s with an expected capital investment of more than 50 per cent, according to Naamsa’s quarterly review of the motor manufacturing industry.

With the R 3,58 billion investment, Naamsa director Nico Vermeulen said this year the local market could come close to recording double-digit growth in industry sales volumes.

Vermeulen attributed the renewed optimism to the strong replacement demand for medium and heavy commercial vehicles, new vehicle affordability in real terms resulting from stable vehicle prices and the expected further reductions in interest rates.

In 2003, capital investment by the industry declined by almost 15 per cent to R2,32 billion from 2002’s 2,73 billion.

The report stated that in 2004, it is expected that more than 86 per cent (R3,1 billion) of the total projected capital investment would be spent on local product, export and production facilities. According to , a further R361 million would be spent on support infrastructure like research and development and R106,6 million on land and buildings.

Vermeulen said the performance of the local automotive industry remained fairly close to the overall economy and was greatly dependant on the performance of the global economy.

But the Naamsa report also highlighted the increasing importance of the local manufacturing industry. It said that worldwide, vehicle production increased by just under three per cent, while production in South Africa rose by 4,2 per cent.

Vehicle exports last year increased by 1,1 per cent and were worth about R20 billion in revenue terms. The report said the industry’s built-up exports this year would be heavily influenced by the global economy. Current projections suggest improvements of about R8,5 per cent to 137 500 units.