No drive for new cars, says WesBank
High levels of indebtedness and continued global volatility have stifled consumers’ appetites for buying big ticket items such as cars, asset finance provider WesBank said on Tuesday.
This followed the release of data by the National Association of Automobile Manufacturers of South Africa (Naamsa) showing that new vehicle sales plunged by 36,3% to 29 471 units in February compared with the same month in the previous year.
There was also a marked increase in the average replacement cycle of vehicles which affected new vehicle sales, said Chris de Kock, executive head of sales and marketing at WesBank.
According to De Kock, in February 2006 consumers replaced their vehicle every 28 months.
At the end of February 2009 however, this had increased to over 36 months, a trend which was set to continue, he said.
Despite the decline in new vehicle sales, the used vehicle market showed some positive signs, he added.
“The WesBank books illustrates that over 64% of all vehicles financed are currently pre-owned, this is up from 46% compared to December 2006.
According to De Kock, this was encouraging, as history had shown that a stronger used-vehicle market normally preceded the recovery of the new vehicle market due to the growth in the trade-in values.
“We are expecting some relief for consumers. With interest rates now on a downward trend and fuel prices remaining at current low levels, the total monthly mobility cost will continue to ease.”
Although he did not see this translating into more vehicle sales until the latter half of 2009, it would accelerate the return of buyers back to dealer floors, De Kock said.—Sapa