By Gordon Bell

JOHANNESBURG (Reuters) - South African new vehicle sales fell 21.9 percent year-on-year in June, as higher interest rates continued to cool consumer spending and dampen confidence, data showed on Wednesday.

The National Automobile Manufacturers Association (NAAMSA) said total sales fell to 39,062 from 50,020 in the same month last year, following a 23.4 percent year-on-year drop in May.

Including sales from Associated Motor Holdings, which joined the survey only recently, total sales were 42,436 units compared with 54,025 in June 2007. Compared to May, sales declined by 1.1 percent from 39,516.

Passenger car sales were, again, the big faller, dipping more than 25 percent due largely to a series of interest rate increases curbing affordability for debt-laden households.

Household debt levels are at record highs, reaching 78.2 percent of disposable income in the first quarter of 2008.

"Current monetary policy was now having a significant effect on curbing consumer demand in South Africa, particularly in the case of the automotive sector," NAAMSA said in a statement.

South Africa's central bank has raised its repo rate by 5 percentage points to 12 percent since June 2006 to try tame soaring inflation.

While consumer spending is now cooling, price pressures, driven by food and fuel costs, are still building, making another rate rise possible in August.

However, the central bank will be concerned by growing evidence the higher rates are crimping growth.

The car sales numbers follow data showing a sharp drop in manufacturing activity and in house prices, reinforcing signs that consumers are straining under the tight monetary policy.

CONFIDENCE WIPED OUT

Consumer confidence tumbled in June, a separate survey showed.

The quarterly consumer confidence index, compiled by First National Bank (FNB) and the Bureau for Economic Research (BER), fell by 18 points to -6, pointing to more households being pessimistic than confident about the future.

It was one of the biggest quarterly falls on record and brings the cumulative decline this year to 28 points.

"What took four years to build up during 2004-2007 was wiped out in a matter of six months in the first half of 2008," FNB chief economist Cees Bruggemans said, adding the outlook for the next 12 months was "miserable".

NAAMSA said in contrast to the car market, heavy and extra heavy vehicle sales remained strong, bolstered by a multi-billion dollar government infrastructure spending programme, with sales climbing about 10 percent year-on-year.

Exports also performed well, jumping 78 percent to 23,193 units, pointing to success in efforts to build South Africa's auto export industry. A weaker rand currency should help to boost the sector further.

Vehicle production is one of South Africa's biggest manufacturing industries and growing motor exports are seen as key to cutting a jobless rate of 23 percent.

But NAAMSA warned that while exports were rising, the tight monetary conditions were hitting the industry hard.

"The worsening downturn in the domestic new car and light commercial vehicle markets was having a major negative effect on automotive dealers and the operations of importers and distributors in South Africa," it said.