Confidence in the vehicle sales market has fallen further, Wesbank said on Wednesday.
Confidence levels for the first quarter of 2009 dipped to 4,4, the bank said at the release of its Vehicle Sales Confidence Indicator in Johannesburg. In October 2008 confidence levels had stood at 4,7.
”It would appear that respondents factored in extreme local and global volatility in the last quarter of 2008, arguably the most volatile three- month period in history.”
Wesbank said the indicator illustrated that the ”very active” and ”active” sentiment had reduced significantly since the launch of the research at the end of 2007.
”This view of declining confidence is further supported by the 36% year-on-year decrease in new passenger vehicle sales in January 2009 as reported by the Naamsa,” Wesbank said.
The indicator measures and evaluates current and future confidence in the vehicle sales market. It is conducted countrywide quarterly in the South African motoring industry. Respondents include vehicle sales and insurance people and dealer general managers.
When asked what factors would affect future activity levels, respondents still believed that interest rates and fuel prices would play an important role. The full impact of the global financial crisis remained uncertain, Wesbank said.
”Furthermore, vehicle prices, consumer confidence and bank approvals were listed as emerging factors of significant importance.”
While petrol prices and interest rates continued to fall in the latter part of 2008, it was believed that the positive impact of both of these factors on new vehicle sales would only be seen towards the end of 2009.
”This is supported by the fact that respondents have a more positive long-term view and many believe the confidence level will be higher in six to 12 months, reaching a level of 6,9 at the end of the year.”
Wesbank said that for the first time since the launch of the indicator, respondents were asked to rate the activity levels of the used vehicle market.
Over 70% of respondents believed that the used vehicle market was far more active than the new vehicle market.
This was supported by Wesbank data that illustrated that over 58% of cars financed were currently pre-owned, up from 45% in 2005.
According to sales and marketing head Chris de Kock, this was ”encouraging”. History had shown that a stronger used vehicle market normally preceded the recovery of the new vehicle market due to the growth in trade-in values. – Sapa