The domestic motor industry broke all local and export sales records by a handsome margin last year, the latest figures show. With a huge capital investment programme under way, industry chiefs expect it to grow and do even better this year.

But the local sales are not just a measure of the industry's success. They also indicate a marked improvement in living standards that has made record sales possible.

It means that in recent years there has been a substantial increase in the number of South Africans with the means to buy cars.

The industry's trade organisation, the National Association of Automobile Manufacturers of SA (Naamsa) says South Africans spent around R125 billion last year on new vehicles - about R29bn, or 30%, more than in 2004.

Altogether, we bought 617 500 vehicles, around 130 000 more than in 2004. Of these 560 000 were manufactured here and the balance imported.

Last year's rise in car sales is just part of the strong rise the industry has experienced since 2000 and suggests that incomes may have increased at a faster rate than official statistics recognised.

It is clear the industry has become a leading wealth creator for the country, and on last year's figures it ranks 19th among the world's vehicle producers.

But while the new-car market has been blossoming, the used-car market has been going through a difficult patch. Naamsa says new vehicle prices remained stable in 2004 and 2005 and recorded fairly substantial declines in real terms.

This led to trade-in prices softening and to a decline in residual values, resulting in fierce competition in this part of the car market.

In addition to increasing sales in the local market, the industry is looking for sales opportunities overseas. In 2004 it sold 110 507 vehicles for R17.5bn.

Last year it raised export sales to 143 400, which represented a large increase in value.

With the industry embarking on a number of export programmes, this growth in exports is expected to go on. And as part of the industry's preparations, last year it invested R5.9bn in new capital works, against the R2.2bn it invested in 2004.

South Africa's main export markets are Japan, which took 32% of vehicles sold overseas in 2004, the United Kingdom, which took 24%, and Australia, which accounted for 19%.

The industry has also had some success exporting components, especially to Germany, but the UK, Spain, France and the United States are also important markets for South African vehicle production.

As well as exporting cars, South Africa is becoming an importer as well.

In 2004, 136 335 vehicles were imported, with Germany. Japan and France the main suppliers.

Imports made up 28.3% of new vehicles sold in South Africa in 2004 and 22% in 2003.

As a result of these imports, consumers can now choose among 1 100 model variants against only 250 in 1995.

This increase in imports is part of a plan aimed at encouraging local companies to specialise in high-volume model production, which gives them economies of scale and improves their competitiveness in the export market.

But while the motor industry has become a wealth creator, the number of new jobs created in the industry has not been large.

This reflects the fact that to compete against the best in the world, the industry has to be as hi-tech as possible.

The manufacturing sector of the industry employs about 34 500 people.

The component sector has about 78 000. In addition the number employed in the trade, which includes vehicle sales and maintenance, is 195 000.

The tyre manufacturing sector employs a further 6 000.

But Naamsa points out the industry is a leading customer for the products of many basic manufacturing activities, including steel production, paint and plastics, petro-chemicals and component fabrication.

In the first 60 years of the 20th century, the motor industry dominated the American economy and its sales were regarded as one of the world's most important economic indicators.

It seems that South African car sales figures have also come to be one of the more important indicators of the health of this country's economy.