South African new vehicle sales rose 20.8 percent in July, adding momentum to its steady growth rate over the past months, said the National Association of Automobile Manufacturers of South Africa on Wednesday.

New vehicle sales reached a total of 56,554 in July, an increase of 9,748 units sold from the 46,806 vehicles sold in July last year.

Sales in all segments had recorded an improvement compared to July last year, however aggregate sales showed a marginal decline of 373 vehicles or 0.7 percent compared with June, NAAMSA said in a statement.

The new car market was just over 19 percent ahead of the first seven months last year.

South Africa's McCarthy Motor Holdings chairman, Brand Pretorius warned that the market was continuing to show signs of a gradual slowdown, according to Car Today.

"The passenger vehicle market was mainly boosted by an estimated 5,000 vehicles delivered to car rental companies. Car rental businesses are continuing to experience high levels of activity, which necessitated most companies having to increase the size of their fleets,' Pretorius said.

NAAMSA also noted that the rate of sales growth may decrease throughout the rest of the year, as a result of expected increases in interest rates. The industry is positive that it is still on course for a third consecutive year of record sales.

Compared to June, new vehicle sales dropped by 0.7 percent and key exports rose 55 percent to 80,651 units in the first six months of the year, as compared to the same period last year.

The rise in vehicle sales in the country is due to strong economic growth and a strong emerging black middle class.

Moreover, NAAMSA said it would soon report further significant employment growth during the 2nd Quarter of 2006 due to the increase production for exports.

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