Motoring industry recovering but stuck in low gear

2010-02-12 13:12

THE latest WesBank Vehicle Sales Confidence Indicator today shows

signs that the local motoring industry is already on its way to recovery for

this year.

One of these signs is that the used car market has seen a drop in

sales and these buyers seem to have moved over to new cars.

According to WesBank, their new-to-used ratio has reached a level

of stability since the middle of last year, with approximately 70% of all

finance transactions undertaken being for used vehicle purchases.

Although a new trend has not yet been set, early signs would

indicate a recovery in the relative demand for new vehicles.

This can be attributed to the increased activity in new model

introductions over recent months, as well as a shortage in quality used car

stock.

The WesBank indicator is an independent research vehicle which

reveals confidence levels among motor dealers. The most recent survey done last

month showed an increased score of 5.5 out of 10, up from 4.7 in November last

year.

The score has grown for three consecutive months, but is also the

highest score since WesBank started this survey in 2007.

Other factors contributing to the score is the stable prime lending

rate and a decline in consumer debt.

There are also more than 50 new model launches planned for this

year. Then there is the excitement for the 2010 Fifa Soccer World Cup which has

also added to confidence levels in dealerships.

WesBank sales and marketing director Chris de Kock says it will

still be a while before we see a significant change. “Consumers are still under

a lot of pressure and have been struggling to repay their debt.”

“There is also still a concern about the stifling effect brought on

by an ever-lengthening vehicle replacement cycle now set at 42 months.

“It is predicted to move out to 48 months over the medium term,”

adds De Kock.


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