Cau­tious growth in mar­ket

Re­cent sur­veys show the car mar­ket is in good shape but there are con­cerns writes Roger Houghton

Business Day - Motor News - - MOTOR NEWS -

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

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