New car sales to jump

Johannesburg - The strong rand, steadier prices and improved access to credit could make it easier for consumers to buy a new car in 2010 - factors that would develop a preference for new rather than second-hand vehicles in South Africa.

New car sales will also be boosted as desperate vehicle manufacturers continue to offer special deals in efforts to retain market share.

Brand Pretorius, CEO of McCarthy, says that in 2009 an average of 1.7 used vehicles were sold for every new one, but in some months twice as many used vehicles left the floor. The McCarthy group sold a record 44 827 second-hand cars. It plans to increase this number to more than 50 000 in 2010.

The National Association of Automobile Manufacturers forecasts that total sales of new vehicles in 2010 will be 7% higher at 423 000 units after last year's 25.9% decline.

In 2009, institutions were wary of lending money, after experiencing huge losses on the large number of vehicles repossessed.

Banks' motor finance portfolios are looking up, making banks less risk averse. South Africans' high debt levels will, however, be a damper, and Pretorius says there is likely to be a more normal approach to vehicle credit.

The improved performance of vehicle books is not only making credit more accessible, but fewer vehicles are being repossessed. This is contributing to a shortage of second-hand cars.

The shortfall is aggravated by vehicle leasing companies holding on to their fleets for longer ahead of the World Cup soccer tournament.

The shortage, together with the stabilisation of new vehicle prices in 2010, will have the effect of reducing the gap between the prices of new and used vehicles, says Pretorius.

Suddenly second-hand cars may not necessarily be the better value option.

- Sake24.com

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