Cautious growth in market
Recent surveys show the car market is in good shape but there are concerns writes Roger Houghton
NEW vehicle sales in SA are expected to slow next year compared to the comparatively strong, double-digit growth experienced this year, according to vehicle risk intelligence company TransUnion Auto Information Solutions.
The company’s forecast is for total new vehicle sales to grow by between 6% to 8% next year, compared to the probable 10% for this year.
This forecast was part of a wide-ranging presentation made by TransUnion sales executive Carel Martin at the company’s well-attended, bi-annual Auto Trends Forum held in Johannesburg recently.
He said that not only were sales this year very good, but the motor groups listed on the JSE had generally posted improved financial returns for the past fiscal year, including returns as high as 3% or more on sales, while a decline in vehicle finance bad debt had resulted in improved results for the finance houses.
However, Martin warned that dealer confidence was falling, according to Wesbank’s quarterly measurement, and consumer debt was rising. This situation was expected to worsen next year due to further pressures on the cost of living on consumers, including rising fuel prices and the apparently inevitable introduction of toll fees for Gauteng driver while the automotive industry would have to face up to a slowdown in sales and a probable increase in retail pricing.
The good news for customers is that the manufacturers, distributors and retailers were likely to continue with incentive programmes as they wanted to try and keep up sales momentum.
The TransUnion executive predicted continued pressure on dealers when com- menting on the situation in the used vehicle market. He said that generally used vehicles are being sold below the prices provided by the TransUnion Auto Dealers’ Guide in an attempt to counter the large price discounts and incentives being offered on new vehicles.
Martin said the gap between trade and retail prices had reached its lowest level in four years in June this year.
“We expect 2013 to deliver some growth, although it is likely to be less than we’ve seen in the past two years.”
These economic sentiments were generally supported by Nedbank’s senior economist Nicky Weimar, who also spoke at the Auto Trends Forum. She said that the South African economy is not growing as fast as it should and there is a lack of forward momentum too.
Weimar cautioned too that the country cannot escape the growing global economic woes, particularly those afflicting Western Europe, which remains a major trading partner.
The Nedbank economist said that a major problem for the SA economy is the increasing trade deficit, with imports now amounting to 30,8% of GDP, while the slowing rate of exports had seen its share slip to 27,9%. The only real momentum locally was generated by domestic spending and this trend could not continue as the ability of consumers to spend was being limited by debt repayments.
“Although there is no consensus about the outlook for 2013 we generally see it as being a fairly similar year to 2012,” said Weimar.
“Emerging markets are seen as only beginning to show reasonable growth again in 2014 although an inhibitor can be a slowdown in private capital expenditure,” she said.
Nicky Weimar, senior economist at Nedbank.
Carel Martin, sales executive of Transunion Auto Information Solutions