Car dealers upbeat about sales

Johannesburg - Confidence levels at car dealerships remained high during the third quarter of the year despite the disruption of an industry-wide strike, resultant stock shortages and the introduction of the carbon emissions tax on vehicles.

The Wesbank Vehicle sales Confidence Indicator released on Tuesday showed that recovery in the sector was steady. It is compiled from interviews with car dealers.

Strikes in the automotive industry during August led to production coming to a near standstill for almost two weeks, resulting in shortages in several locally-produced models.
 
After the strike there was a surge in demand for used cars, contributing to the increase in demand in the third quarter, said Chris de Kock, Wesbank executive head of sales and marketing.

De Kock said that Wesbank had seen its used to new car ratio increase over the past five months. It now finances nearly two used cars for each new vehicle.

Another factor driving used car demand is the de-fleeting of car rental companies following the 2010 Fifa World Cup in June and July.

"Both of these factors will disappear and we expect new car sales to be stronger again," said De Kock.

De Kock expects vehicle sales in 2011 to remain positive, but by no means close to the levels of the 24% growth the market has experienced this year.

"Growth in 2011 will be off a much higher base than this year," he said. 

Low interest rates, debt servicing levels and the relatively lower inflation level of new vehicle prices are expected to aid the market.

However, high household debt and a lack of disposable income are still two of the biggest barriers to sales. 

The Wesbank survey found that affordability was the most common factor that prevented car dealers from closing sales. 

 - Fin24