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Johannesburg - Car finance company WesBank's latest Vehicle Sales Confidence Indicator has remained stable at low levels in the third quarter, despite the current market crunch.
However, the slide in the rand to levels above R10/$ since the survey will knock confidence at dealerships.
Wesbank's countrywide survey among dealers, sales managers and vehicle insurers shows an activity level of 4.7, the same level as the previous quarter.
This figure still indicates low levels of confidence in the industry - a tally above seven indicates an active market. A retreat in fuel prices, a belief that the market had bottomed and interest rates had peaked was the main reason why activity levels didn't drop.
Chris de Kock, WesBank's sales and marketing director, said he was surprised that dealers were not more negative about trading conditions, given that the survey was conducted when the crisis on world markets was already apparent.
However, De Kock says if the same survey was done today it would probably have indicated a further loss of confidence, given the recent fall of the rand to levels above R10/$.
Higher import costs and new vehicle prices will further dampen demand next year as new vehicle price inflation accelerates to high double digits - much higher than in recent times. Pricier new cars help the used market and the trend towards pre-owned cars and buying down will increase. Used cars represent almost 60% of the total market, from less than half at the start of the year.
The survey also tracked activity according to car buyers' income. "Those earning less than R12 000/month have exited the market. It's also an indication of tighter credit extension requirements at banks," says De Kock.
Car repossession at Wesbank peaked in July, while the number of customers who are in arrears on their repayments have been declining for the last seven months.
Wesbank repossesses on average 2 200 vehicles a month, about a third of the total. A year ago the bank only took back 1 000/month.
Dealers are more upbeat about the outlook for the next six months and suggest that the confidence levels may reach 6.2 in the first half of 2009, while 12 months out a healthy market above the seven-level is expected.
- Fin24.com