Outlook for vehicle market hinges on political landscape – bank

17th November 2017

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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It is impossible to accurately forecast where the new-vehicle market will end the year, or what the 2018 market will look like, says Standard Bank Vehicle and Asset Finance (VAF) group head Simphiwe Nghona.

“Everything hinges on the political landscape. Anything can happen in the last quarter. There are a lot of unknowns. We’ll only know once the fourth quarter closes.”

The ruling African National Congress is scheduled to elect a new leader in December to replace current president Jacob Zuma.

Nghona says new-passenger-car sales are up 4% for the year to end-September.

Sales were boosted last month by an uptick in sales to rental companies, stocking up in anticipation of the holiday season as well as expected vehicle price increases.

“We see from incoming finance applications that consumers are still seeking finance for vehicles, especially in the used and demo markets,” says Nghona.

“This is driven by consumers downscaling and seeking value for money. Consumers are under tremendous pressure.”

Nghona expects this pressure to continue into the foreseeable future.

He says 2017 truck sales indicate that SA Inc is finding cold comfort in the current economic environment.

“Until sentiment improves, companies are going to sit on their cash and not replace their vehicles, unless they are forced to do so.”

Nigerian Opportunity
Nghona and his team at VAF are active in 14 countries outside South Africa.

Most of these countries depend on imported used vehicles for mobility, with these vehicles predominantly bought cash.

“We are investigating if it is possible to participate in the financing of these vehicles,” says Nghona.

He adds that VAF is keen to move into Africa and partner vehicle manufacturers.

One such existing venture is a partnership between Ford, Ford Credit and Standard Bank, in Swaziland, Namibia and Botswana.

“We are engaging other vehicle manufacturers in South Africa with footprints in Africa as well,” says Nghona.

“We are also keen to explore other mobility options,” he adds.

Another VAF project is in Kenya, where Standard Bank is on site at Uber, with the ability to offer a bank account and vehicle finance to prospective drivers.

“We can expand this to the rest of East Africa,” says Nghona.

“Africa is a tough continent to do business in,” he notes.

“It is a fatal mistake to dictate what should happen from South Africa, and to wish to mirror how things work in South Africa in another African country.

“You need collaboration, local skills. You need to go there and spend time there. Each country is different and each country’s legislation is different.”

Namibia is Standard Bank VAF’s biggest market outside South Africa, followed by Botswana and Nigeria.

Nghona says Nigeria holds the biggest potential for growth in the next five years.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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