Nov 26, 2010
Car importers more bullish than local-brand dealers as rand strengthensBack
Hyundai|WesBank|South Africa|Bank Approvals|Chris De Kock|A Vehicle Replacement Cycle|Credit Records|The 2010 FIFA World Cup
© Reuse this
Wesbank sales and marketing head Chris de Kock says that there has been strong growth in the sale of imported vehicles in recent months, as a result of the rand’s strength-ening against a basket of major currencies, and of the fact that local production lines experienced disruptions in the second half of the year owing to labour action in the automotive industry, which caused a delay in the delivery of these vehicles to customers and a degree of import replace-ment.
“Associated Motor Hold-ings, [importing Hyundai, Kia, Daihatsu, for example], are giving the local guys a good run for their money, mostly on the back of great product,” says De Kock.
The WVsCI shows that the overall confidence level among vehicle dealers remains stable, at 5,7 out of 10, down from the 5,9 recorded in July.
De Kock attributes the decline to the strike action in the motor industry, and the introduction of the new carbon tax in September.
Another of the most notice-able trends in the latest results is the significant increase in confidence and activity in the used-vehicle market.
According to the data, 61% of the dealers surveyed say that they will describe the used-vehicle market as more active than the new-vehicle market, compared with 45% in July.
Data from the WesBank book confirms this sentiment. Since July, WesBank’s used-to-new ratio has increased from 1,63, to 1,91 used cars financed for every new car financed.
According to De Kock, this is driven by stock shortages in the new-car market, as well as rental companies defleeting after the 2010 FIFA World Cup.
Another key finding is the surge in the percentage of dealers who cited affordability as the most common factor preventing them from con-verting leads to sales, jumping from 13,1% in July to 21,6% in October.
In contrast, those citing bank approvals as the main reason fell from 25,2% to 18,5%.
According to De Kock, there are a number of factors that point towards positive sales growth in the vehicle market – commercial vehicles included – in 2011.
These include lower debt servicing costs owing to the favourable interest rate environment, low expected new-vehicle price inflation, and an upward trend in business and consumer con-fidence.
“It has never been more affordable to buy a car,” says De Kock. “We have seen a noticeable increase in the demand for credit.”
However, he says there are still challenges that may hamper new-vehicle sales, such as a high household-debt-to-disposable-income ratio (at around 80%), an increasing number of consumers with impaired credit records, and a vehicle replacement cycle that gets longer.
This last factor is backed by data gleaned from WesBank’s own book, which shows that the average deal duration for new vehicles increased to 65 months in September.
“To put this into context, the average deal duration recorded in September 2006 was less than 30 months,” says De Kock.
He adds that, although Wesbank may be receiving a growing number of credit applications, “we have limited opportunities to convert these into business”.
De Kock also notes that there is a visible buy-down trend in the market, with the Wesbank book up 40% in terms of new business volume, but only 30% in value.
He says he does not expect South Africa’s new vehicle market to “show massive gains” in 2011.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines
Other Passenger Vehicles News
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Mitsubishi Motors South Africa (MMSA) has introduced a 4x2 derivative of its Pajero Sport sports-utility vehicle (SUV), which will give it access to a substantial slice of the full-size SUV market, where it will compete with the likes of the Ford Everest, Chevrolet...
South African Energy Minister Ben Martins has affirmed that the government wants the country to be globally competitive in the nuclear sector. "Our responsibility has always been ... to ensure that, in nuclear energy, South Africa can compete with the rest of the...
Mercedes-Benz South Africa (MBSA) president and CEO Dr Martin Zimmermann describes the new S-Class as “a special place to be”, with the car creating a sense of “wellness” once you are seated inside the German brand’s flagship model. It is difficult to argue...
Water scarcity and water-quality issues are broadly recognised and understood in most political, business and civil organisations in South Africa, but solving water issues will require wide and continuous action in catchments and municipalities by organisations and...
Work is well under way on the R212-million Imvutshane dam, 30 km north-west of Stanger, in KwaZulu-Natal, which is a key link in supplying people in rural Maphumulo with a reliable source of safe drinking water.