New vehicle market has bottomed, says Wesbank
May 19, 2009
By Roy Cokayne
Wesbank, the vehicle and asset finance house, believes the new vehicle market has bottomed.
But Chris de Kock, the executive head of sales and marketing at Wesbank, stressed that it was difficult to make predictions in this market, adding that the new vehicle sales figures in March and last month "surprised a lot of us".
Total new vehicle sales last month plunged year on year by 43 percent, following a 30 percent decrease in March.
"The extent of the downturn in the global and local market was underestimated," he said last week.
Wesbank believed the new vehicle market had bottomed after the release of the results of its vehicle sales confidence indicator for the first quarter.
The indicator for the second quarter, released last week, showed the confidence levels of vehicle dealers had dropped from 4.4 in January to 4.2 on a 10-point scale for the second quarter - its lowest level since the indicator was launched six quarters ago.
De Kock said the fall to 4.2 was indicative of the very depressed and difficult times vehicle dealers were going through.
"An index score of between 4 and 5 is very low in terms of confidence levels and leads us to think it's the lowest it will get in this cycle," he said.
Despite the deterioration in the indicator, De Kock expressed confidence the new vehicle market would start recovering because of an improvement in some key indicators, such as debt servicing and household debt to disposable income ratios.
The indicator showed that the future outlook of dealers was more positive. This is based on whether they believed the market was likely to increase or decrease in the next three, six to 12 months.
About 62 percent of dealers believe the market will improve in six to 12 months.
De Kock said credit factors and consumer mind-set were the two most important factors affecting current activity.
New vehicle inflation was growing quite substantially and having an effect on the willingness of consumers to buy vehicles.
De Kock added that in a normal market, Wesbank sold one new vehicle for every used vehicle and this ratio increased in a strong market to 1.3:1, but was now at 0.7:1.
|
|
