WesBank Vehicle Sales Confidence Indicator Announced

WesBank Vehicle Sales Confidence Indicator

Some would say that the financial crisis might be over and that we’re about to get out of recession, so how exactly do these things correlate with vehicle sales? Well the folks from WesBank have just released their vehicle sales confidence indicator and by the looks of it, things are neat as we’re looking at the highest levels in two years. Check out the press release after the break.

Confidence levels highest in two years
The latest findings from the WesBank Vehicle sales Confidence Indicator (WVsCI) offer strong evidence that the South African motor industry is set to follow a road of recovery during 2010. The findings from WesBank’s independent research, which was conducted in late January 2010, reveal that confidence levels amongst motor dealers increased to a score of 5.5 out of ten, up from 4.7 reported in November 2009. This is not only the third consecutive quarter of confidence growth, but also the highest score achieved since the indicator’s inception at the end of 2007.

The results, although still moderate, is good news for the motor industry and is supported by a number of positive factors. Firstly, the 6.3 percent year-on-year growth seen in combined new passenger vehicle sales for December 2009 and January 2010, as reported by NAAMSA, has provided the industry with a good view of the underlying growth trend. Added to this, dealers are also feeling decidedly more upbeat about the future, due to a gradual improvement in dealer profitability during the final quarter of 2009, thus indicating that the market rationalisation is starting to reach its conclusion.

A stable prime lending rate, a decline in the debt service ratio, a flood of more than 50 new model launches planned this year, as well as the general excitement amongst South Africans around the arrival of the 2010 FIFA Soccer World Cup have all added to the increase in confidence levels amongst dealers.

In addition to the current and future perceptions, WesBank also tracks trends gleaned from its book and other credible industry bodies.

New to used vehicle sales ratio stabilises
WesBank’s new-to-used ratio has reached a level of stability since the middle of 2009, with approximately 70 percent of all finance transactions undertaken being for used vehicle purchases. Although a new trend has not yet been set, early signs would indicate a recovery in the relative demand for new vehicles. This can be attributed to the increased activity in new model introductions over recent months, as well as a shortage in quality used car stock.

Activity levels continue to grow
WesBank’s book continues to support the Indicator research findings with further growth in application numbers. Applications received per business day have increased from 3100 in January 2009 to 3700 in January 2010 an increase of 19 percent year on year. Concern however remains over the stifling effect brought about by an ever lengthening vehicle replacement cycle now set at 42 months and predicted to move out to 48 months over the medium term.

Outlook for 2010

Although confidence levels have increased to an all time high of 5.5, it is still best described as moderate. WesBank therefore maintains its prediction of a sustained but gradual recovery in the South African Motor Industry for 2010.

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