Johannesburg - Vehicle repossessions have peaked, Chris de Kock, WesBank's sales and marketing director said on Wednesday.
"Repossessions were up 93% in July as compared to the previous year, but we've already seen the number come off 20%," he told the release of the bank's latest vehicle sales confidence indicator.
"When it comes to repossessions we have peaked - this is because consumers are definitely tightening their belts.
"But still for the next year, we'll have a high level of repossessions."
He also wished that National Credit Act had appeared a year earlier.
"Prior to the NCA, we were lending money without understanding the debt of the individual customer."
While the corporate market was holding up well, he still saw a high degree of volatility there.
He confirmed that the bank had cut back its staff by 30%, particularly on the retail side.
"We've had a 'no recruitment' policy for the last 18 months."
According to the indicator the market appeared to have stabilised at an activity level of 4.7% for the third quarter, the same as the previous quarter.
"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."
Bottom of the cycle
The main factors that contributed to the more positive outlook included stabilising interest rates and lower fuel prices.
"Furthermore, it would appear that this sentiment is being driven by the fact that dealers noted July as the bottom of the cycle and anticipated the market to start improving."
However, he pointed out that overall confidence would be influenced by several factors.
"From a household debt to disposable income perspective, consumers need to start paying off short-term debt in order to increase their affordability levels and to service their current debt."
Stable or even lower interest rates in 2009 and the subsequent decreases in the fuel price would help drive confidence levels and provide much relief for consumers.
From an economic perspective, De Kock said there were a number of risk factors that would influence the future outlook.
"The higher rand dollar exchange rate seen in the past few weeks will have a knock-on effect as imports will become more expensive, likely increasing new vehicle prices."
A plethora of consumer and economic factors continued to affect the local market. The current global climate remained an important consideration for the market outlook as the year end drew closer.
According to WesBank's profile of buyers purchasing new vehicles, De Kock noted that affordability was a factor for consumers in the younger age and income bracket, - more specifically individuals earning up to R12 000 per month appeared to be dropping off.
"In contrast, individuals earning in excess of R24 000 per month seem more resilient, albeit at a lower level than previously seen.
- Sapa