Motor industry continues its slow recovery

The latest new passenger vehicle sales figures released by NAAMSA show a marginal decline of 6,7% in November when compared to October 2009. However, the good news for the motor industry is that the sales reported for November is 4,6% up on November 2008. This is the first time in nearly three years that the monthly reported sales are more than the corresponding month of the previous year.

Although this is encouraging, WesBank believes the outlook for 2010 will remain challenging as low levels of consumer and business confidence, coupled with credit lending factors will continue to hamper the rate of recovery and consumers ability to purchase new vehicles. With GDP growth predicted to remain at pedestrian rates and household debt levels still very high, consumers are going to take some time to de-leverage.

Looking back at 2009 a key supporting factor for the motor industry has been the 500 basis points decrease in the prime lending rate since December last year. This has provided much needed relief for cash strapped consumers.

According to Chris de Kock, Executive Head of Sales and Marketing at WesBank, a key challenge for 2010 is finding ways of bringing customers back into the market sooner. WesBank has seen a noticeable increase in the replacement cycle of new vehicles over the last three years. In 2006 customers on average replaced their vehicles after 29 months. Today, however, customers will wait up to 41 months before replacing their current vehicle.