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JOHANNESBURG, Feb 3 (Reuters) - South African new vehicle sales fell by 35.4 percent in January compared with the same month a year ago, partly due to restrictively high interest rates, the National Association of Automobile Manufacturers said on Tuesday.
Sales fell to 30,503 units, NAAMSA said. Including sales from Associated Motor Holdings -- which reports separately -- total sales fell to 32,999 vehicles compared to the 52,124 sold the same month in 2008.
New vehicle sales have slumped in recent months on the back of 5 percentage points of interest rate hikes between mid 2006 and mid 2008 aimed at taming inflation, which have hit key sectors of the economy, adding to a global downturn.
In a statement, NAAMSA said all sectors of the South African automotive industry were experiencing an unprecedented and severe deterioration in operating conditions, with the entire automotive value chain facing a cash flow and viability crisis.
"During 2009, market sentiment and automotive industry trading conditions (will) continue to be tested by the high interest rate environment, record high levels of household debt, volatile exchange rates and unpredictable international financial markets," it said.
Recent above-average new vehicle price increases, in response to past high input costs and a weaker rand currency, would also undermine affordability and demand.
The Reserve Bank cut its repo rate by 50 basis points to 11.5 percent in December on an improved inflation outlook for 2009, and to ease the strain on the economy.
Most economists polled by Reuters expect a more aggressive cut of around 100 basis points on Thursday, at the conclusion of the central bank's first policy making meeting of the year.
"Any improvement in the domestic environment (is) dependent on a revival of consumer expenditure, aggressive interest rate reductions and fiscal stimulation," NAAMSA said. (Reporting by Stella Mapenzauswa; Editing by Jon Loades-Carter)