The number of black buyers of vehicles has doubled in the past five years, making up 34% of South Africa’s largest vehicle lender Wesbank’s book from 17% in 2003, it said on Wednesday.
“The black market is the one significant growth area. [Last year] this demographic was 15% up year-on-year in a declining market,” said Wesbank’s head of marketing and sales, Chris de Kock, on Wednesday.
He added that the trend signifies that black middle-class consumers — the so-called black diamonds — are propping up the rest of the market.
If the black market had stayed stagnant at 2004 levels, “the overall market would have increased negligibly in 2006 and declined by close to 25% in 2007”, he said.
Vehicle sales fell by 5,2% last year to 612 707 units from a peak of 646 566 units in 2006, as higher interest rates and tougher credit laws eat into consumers’ pockets.
However, Wesbank painted a grim picture for the vehicle market in the next 12 months.
Its inaugural quarterly vehicle sales indicator, which assesses the current activity in the market as well as expectations for vehicle sales, scores confidence on a scale of one to 10. The higher the score, the more active the market becomes and vice versa.
The indicator currently shows that the score was 5,4 in December 2007, a rating that signals that the market is inactive and will remain inactive for the next 12 months, but the score is predicted to pick up to six and 6,5 in the next six months and 12 months respectively.
“The industry deemed the market ‘inactive’ for a number of reasons. Most notably, 87% of respondents singled out increased interest rates. The industry is also feeling the pinch of the National Credit Act, and one in four respondents mentioned higher fuel prices,” said De Kock.
He added that most respondents expect the pressure to begin to show signs of easing in the fourth quarter of the year.
The perceptions are gathered from 500 vehicle-sales and insurance people, dealer principals, dealer general managers, franchise directors and vehicle sales managers across the country.
However, De Kock said dealers are feeling optimistic about the corporate and fleet sides of the market, thanks to increased infrastructure spending in the lead-up to the 2010 World Cup.
The indicator pretty much mirrors National Association of Automobile Manufacturers’ of South Africa data, which shows that new passenger vehicle sales dropped by nearly 10% last year, but the overall market fell by just more than 5% with the pressure lessened by commercial vehicle market sales. — I-Net Bridge