Credit crunch hits KZN cars

2008-06-04 00:00

Consumers in KwaZulu-Natal have not escaped the wave of passenger vehicle repossessions currently being experienced nationally, despite the fact that the average consumer in the province is less likely to default than his or her counterpart in other major centres.

Although it is difficult to uncover exact figures from finance houses, recent national reports noted that car repossessions by WesBank (with a third of the market share) doubled to more than 1 000 a month in the second half of last year, from about 600 a month.

Given these statistics, it is possible to argue that taking into account all finance houses — several hundred vehicles per month are now repossessed in KZN.

It is no secret that the new passenger vehicle market is in the midst of a significant slump and this has no doubt put pressure on vehicle dealerships and vehicle finance entities, among others.

According to the latest available statistics, the average monthly number of new passenger vehicles sold in Pietermaritzburg slumped to 388 in 2007 from a peak of 428 in 2006, an 8,38% year-on-year decline.

Chris de Kock, sales and marketing director at WesBank — the country’s largest vehicle and asset finance house — told The Witness that although KZN’s monthly repossession levels are slightly below the national average, the situation remains serious.

The current level of vehicle repossessions has not yet reached the (historic) peak level and De Cock said it is difficult to measure the cycle, as a downturn can last anywhere between six months and three years.

He said there has been a sharp surge in repossession levels in recent months, adding that the effects of this trend have been “more pronounced” in this cycle.

Meanwhile, Karl Bauermeister, director of origination and sales at Standard Bank Vehicle and Asset Finance, noted that one option to consider is a recently introduced concept known as personal leasing.

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