Nov 26, 2010
Car importers more bullish than local-brand dealers as rand strengthensBack
© 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 (150 word limit)
Other Automotive News
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 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.
This Week's Magazine
Today’s organisations execute projects within increasingly complex environments – particularly in the engineering sector. The ability to successfully execute these projects is what drives the realisation of successful projects and, ultimately, the achievement of...
South Africa’s distribution grid is a twentieth-century relic, which must be changed to serve the country’s modern electricity needs, says South African National Energy Development Institute (Sanedi) Smart Grid Programme manager Dr Minnesh Bipath. “What we are...
There is a disparity in government funding provided to integrated transport networks – bus rapid transit (BRT) networks ¬¬– and that given to conventional bus services, says Putco executive director Thys Heyns. “We have neglected and strangled conventional bus...
The Johannesburg Social Housing Company (Joshco) is building 502 rental housing units, valued at R200-million, in Dobsonville, Soweto, which are scheduled for completion in June 2016.
Automotive component manufacturer and distributor Metair is centralising its research and development (R&D) work in Turkey, in an attempt to bolster the company’s ability to produce affordable start/stop batteries. The new R&D centre is part of an expansion plan in...