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>  Dealers feel the Pinch
>  Weak November dampens car gains
>  Dealers more confident of auto market upswing
 

Events

The Planning Phases.

278 David Horner and Tony Cillie hard at work planning how we can help motor dealers.

The Renaming of PinnAfrica

Tony Cillie (Auto F&I Gauteng 1)

David Horner (Auto F&I Natal and Freestate)

Greig Hains (Auto F&I West and East Cape)

Brad Ross (Auto F&I Gauteng 2)

Kate Colsten (Auto F&I Agent)

Neville du Piesanie (PinnAfrica, Chief of Operations)

Marijke Lilleike (PinnAfrica, Sales Director)

Willem Lombard (PinnAfrica, Managing Director)

Graeme Peacock (PinnAfrica, Business Development Manager)
 

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NEWS

Dealers more confident of auto market upswing
11th November 2009

Dealer confidence was starting to return to the new vehicle market.

Vehicle financier WesBank on Wednesday reported that its Vehicle Sales Confidence Indicator – measuring current activity and future confidence from a sample of 250 dealers – have jumped to 4,7, up strongly from a level three months ago of 4,3.

“Dealers feel a lot more confident now. Confidence levels are starting to return to pre-financial collapse sentiment,” said WesBank sales and marketing executive head Chris de Kock.

However, he added that WesBank did not necessarily share dealers' optimism for a rapid recovery of the market – which had been in sharp decline for more than 18 months – but thought “a slow recovery more likely”.

De Kock considered the single biggest factor hampering industry recovery to be South Africans' high debt-to-income level.

He noted that even if there had been a 15% increase in daily credit applications to WesBank from January, the quality of applications had worsened.

“I get the impression the consumer leaves it to the bank to decide whether they can afford a vehicle,” said De Kock.

This meant that credit approval rates remained stable, recording no significant upswing.

Vehicle repossessions had dropped further to a six-month average of 1 509 vehicles a month.

“It should be 700 to 800 in a normal cycle, but we are still down from the 2 200 to 2 300 vehicles a year ago,” said De Kock.

He added that WesBank considered the next interest rate move to be up, rather than down as had been the trend over recent months.

REPLACEMENT CYCLE A MAJOR CONCERN

De Kock said the noticeable increase in the average replacement cycle of vehicles continue to place a damper on new vehicle sales.

According to the WesBank book, the average replacement cycle three years ago for new vehicles was every 29 months.

Today, consumers will wait up to 41 months before replacing their vehicles.

He said indications were that this was to escalate to 48 months by the end of 2010.

De Kock said “this beast” was created by the National Credit Act, which placed no limitation on the funding period for new vehicles.

However, he said WesBank was, in certain instances, pushing down the repayment period when considering it not appropriate, even if this carried the risk of losing business.

De Kock said 84% of business written in October was done over an 60-month period.

The average repayment period for new vehicles now spanned 62 months, as opposed to the 52 months recorded earlier.

The problem with such a long repayment period was that few vehicles could outlast the repayment period, creating a situation whereby a consumer was left paying an asset which no longer functioned.

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Weak November dampens car gains
03rd December 2009

Johannesburg - A disappointing November put the brakes on any momentum built up in dealer showrooms over the last few months.

Sales of new passenger vehicles in November improved slightly compared to last year, but were down on October. Including commercial vehicles, the South African market is now less than half the size it was at the height of boom in 2006.

One positive for the local industry is plans by local assemblers to up production in 2010, mainly for export.

New vehicle sales figures for November, released by the National Association of Automobile Manufacturers of SA (Naamsa), showed total market sales for November dropped 5.1% to 34 295 units compared to last month.

November new registrations were down 6.7% on the same period last year. Year-to-date sales indicate a 27.1% decline, the market reaching 364 812 new vehicles sales compared to the 500 562 recorded to November last year.

Passenger car sales declined 7.2% compared to October 2009. The light commercial vehicle (LCV) segment was the only one to show any form of resilience, with just 30 sales less than October. However, LCV sales dropped 22% on November 2008, a trend strongly opposed to the 4.6% gain in sales by passenger cars over the same period.

Importers of Kia and Hyundai, AMH, again provided a fillip to the market. Without this strong showing, November car sales would have been down 3.9% compared to last year. Sales to car rental also underpinned the market, constituting 11.8% of the total.

Export contracts

Nissan South Africa announced last month it is looking to ramp up vehicle production at its Rosslyn manufacturing plant near Pretoria to 45 000 units this financial year, from 33 000 the previous year.

Nissan SA manufactures the popular Renault Sandero, NP200 and Hardbody bakkies at the plant. France's Renault and Japan's number two vehicle company have a global alliance.

Greg Field, Nissan SA's corporate and finance director, told reporters last week the firm is in early negotiations with its parent company about a possible export contract for African and Middle Eastern markets to bring local production to more that 50 000 units. This figure is the minimum production requirement under government's new industry development programme (APDP), set to replace the current incentive programme in 2012.

Volkswagen of South Africa (VWSA) will export 55 000 new generation Polos next year, doubling this year's export volume of 28 000 units, of which 19 000 are new Polos.

In 2008, exports from the company's Uitenhage plant amounted to about 40 000 units, up from the roughly 35 000 vehicles recorded in 2007. The new Polo, awarded 2010 European Car of the Year status this week, will be introduced to the local market in early 2010.

VWSA's export programme follows a four-year, R3.5bn investment programme, R500m of which will be spent next year. A major part of the investment programme is designed to increase the local content of vehicles. The new Polo would carry 70% South African components, up from less than 40% in the current range.

Year-to-date exports of passenger vehicles from local manufacturers - including Toyota, BMW, Mercedes and Volkswagen - are down 36% on last year, reaching just over 117 400. Only 40 400 light commercial vehicles have been exported in 2009, down more than 47%.

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