Car retail confidence up for second quarter

Chris de Kock, head of sales and marketing at Wesbank, said yesterday confidence edged up to 4.7 index points in the third quarter to October, from 4.3 in the previous quarter, pointing to a recovery in new vehicle sales, albeit at a slow pace.

The quarterly indicator surveys car dealers to gauge current confidence in the vehicle market and to predict outlook on future activity. Current activity and future confidence are measured on a scale of 1-10. A score between 4 and 6 means the market is inactive, while a 9-10 score shows a highly active market.

The latest quarterly indicator encourages hopes that a recovery in new vehicle sales is under way. Hundreds of dealers have shut down in the recession.

The National Association of Automobile Manufacturers of SA (Naamsa) reported this week that new vehicle sales rose, off a low point, in the third quarter. Yesterday, De Kock said the increase in confidence was supported by a marginal improvement in new car sales, as Naamsa reported.

He said interest rate cuts had provided relief to cash-strapped consumers and that arrear accounts and repossessions would continue to decline.

The vehicle finance group had seen a “noticeable increase” in the number of applications received, underscoring increased activity in the motor industry, De Kock said. The daily rate of new applications received rose 15%, from 3134 in January to 3602 in October.

But he warned that the quality of applications last month was worse than it was in January. Bank lending, he said, was still an “inhibitor”.

Dealers appeared optimistic about the future, he said. The outlook for future activity indicated a score of 5.8 in the projected fourth quarter of this year. Over the next six months the score is at 6.7 and in 12 months it should hit 7.3.

This future activity pointed to a gradual recovery in new vehicle sales over the next year, he said.

Source: Business Day

Published courtesy of