South Africa's vehicle manufacturing industry sets to boom in 2006, bolstered by continuous growth of economy and new car consumption, the industry 's national association said on Monday.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) said both domestic sales and production of new motor vehicles were projected to reach all time highs during the rest of the year.

This follows the release of the quarterly review of business conditions in the manufacturing industry during the first quarter of 2006.

NAAMSA director Nico Vermeulen said several factors "should serve to support demand for new motor vehicles during 2006," including gross domestic product growth of about 5 percent, strong business confidence, improving corporate profitability, positive consumer sentiment driven by low inflation, stable interest rates and improved vehicle affordability.

"Moreover, car rental business (boosted by higher levels of economic activity and tourism) and government business (driven by increased investment in infrastructure development and basic services delivery) should also contribute to higher demand for new cars and commercial vehicles," he was quoted as saying by South Africa's SAPA news agency.

Employment in the auto industry increased by 1,047 jobs in the first quarter compared to the same period in 2005, according to the review.

It further stated that the "robust sales trend and positive undertone" continues in the domestic market. The monthly year-on- year growth during the first four months of 2006 had however slowed modestly.

Vermeulen also said the manufacturing industry's capacity utilization levels remain close to all time records.

NAAMSA said on its official website that during 2005, South Africa was "probably the best performing market (of motor vehicles) internationally " with both domestic sales and production rising to all time highs.

The magnitude of 2005 sales was in the order of 565,018, some 25.7 percent up on 2004, it said.

Source: Xinhua