Fin24

Tough times ahead for auto industry

2012-11-13 16:03

Johannesburg - The relatively good times of 2012 for the local automotive industry are unlikely to continue next year, credit information company TransUnion warned on Tuesday.

Major dealer groups had seen financial results improve, with new new-vehicle sales up by 10% compared to 2011, continuing cost control and a decline in bad debt.

"But all is not rosy as dealer confidence levels are decreasing when compared to those seen over the past 18 months," said Carel Martin, spokesperson for TransUnion Auto Information Solutions.

"There is good reason for this, as consumer debt continues to grow and reports indicate that households are experiencing further strain."

Other factors which could pressure the industry included rising fuel prices, toll fees for Gauteng drivers, and stabilising vehicle sales volumes.

But continued support programmes from manufacturers, coupled with low interest rates, could potentially boost consumer credit demand.

Low price increases for 2012, which had contributed to growth, were unlikely to be sustained next year as the rand weakened and input costs increased.

Martin predicted continuing pressure for used car dealers, who were selling used vehicles below the recommended retail price in an attempt to counter price discounts and incentives offered by the new vehicle market.

Gross margins in the used vehicle market appeared to have stabilised after the average percentage gap between trade and retail values reached its lowest level in the past four years in June 2012.

"Given the current market conditions, based on positive trends, constant supply and relative price stability seen in 2012, we can expect 2013 to deliver some growth, although it should be less than what we've seen in the past two years," he said.

Comments
  • warwick.railton.7 - 2012-11-14 06:55

    Having a car these days is expensive, the anc uses car owners as a cash cow to milk dry. Rising fuel costs and mind boggling etolling costs are making ownership very unatractive. We are not a free society, not with so many limitations and the anc will be making it worse................

  • heathway.master - 2012-11-14 08:49

    Would not worry too much about the increased burden of the about to be introduced e-toll fees. At the first toll meeting held on the East Rand, motorist’s tempers rose so high, that the police had to be nearly called in. Opposition to e-tolling is equivalent to a "TAX REVOLT" by Gauteng motorists. If the Government, Civil Service, Parastatals and Municipalities decided to get their house in order, there would be more than enough money available to cover infrastructure costs. With a mass boycott on the paying of toll fees, SANRAL will be helpless and as useful as an emaciated, cleft pallet, eunuch pig with no legs.

  • ania.domagala - 2012-11-15 07:40

    @SimplySouthAfrican If you understood economics at all, you would not say something like that. Increase wages leads to an increase in prices in order to cover those wages which, at the end of the day, you have to cover to pay those wages and before you know it, you have even less than when you started to strike... The trick is to learn to save 10% of your earnings and only spend 90%. That is the way out of poverty. Most poor people think earning more money is the answer. The problem is that people are in the habit of earning more and spending more. The answer is not in earning more but in how much of those earnings you keep. Start with saving 10% and you will come a long way away.

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