Photo by: Duane Daws
WesBank’s newest Vehicle sales Confidence Indicator (WVsCI) shows dealers do not expect sales in the new vehicle market to grow over the next three to six months.
The indicator predicts the new and used vehicle sales markets for the next six months.
Data for the indicator is collected from WesBank’s book, as well as through survey answers from dealers. Every quarter 280 dealers (selling new and used vehicles) from 2 000 dealerships countrywide participate in the survey.
The newest WVsCI shows there are positive as well as negative factors bound to influence new vehicle sales for 2014.
The anticipated release of new models that promise to sell in high volumes is one positive factor.
Also, although stock availability of new models was a significant concern last year, it is becoming less of an issue, reports WesBank.
Concerns about stock are expected to lessen and consumers should be less affected by lack of supply.
When it comes to negative factors influencing the WVsCI, the number one concern for the next six months is the interest rate.
However, the negative impact this will have on new vehicle sales is expected to lessen, especially once buyers realise that the rates still remain low compared with previous years.
Exchange rates – ranking second on the list of negative factors over the next six months – are a growing concern. This directly impacts the third- and fourth-biggest concerns, namely vehicle prices and fuel prices.
New car prices are expected to continue increasing owing to the weakening rand.
Concerns over fuel prices remain, and are expected to have a negative effect on new vehicle sales.
The result of these factors is an increase in living costs, which will affect levels of disposable income.
The high cost of living, brought on by increased fuel prices and the unfavourable exchange rates, ranks sixth for factors that will have a negative impact on the market.
The indicator also shows the political situation and elections as having a negative impact. This could be interpreted as uncertainty around the political climate.
While the new vehicle market expects to see flat growth, the indicator predicts increased activity in the used car market as it offers a good value proposition.
The current sales ratio of used to new cars is 1.27 to 1, and that is set to grow in the coming months with the indicator showing an expected increase in used vehicle sales.
The positive factors that will influence activity in the used car market are new vehicle price increases, affordability, and interest rates.
Rising new car prices widen the gap between new and used, forcing buyers to look at pre-owned options in their search for better value for money.
The fuel price remains a big concern. WesBank’s Mobility Calculator shows that fuel costs have doubled since 2007, and
now nearly match the total installment for an entry-level vehicle.
Once the fuel-price is factored in, consumers will have less to spend on their vehicles, with the same true for any increase in the interest rates.