New vehicle sales confidence down

The indicator showed that confidence levels dropped further to a level of 4.2 in the second quarter of 2009, down 18% year-on-year.

"The low score was undoubtedly influenced by seasonal factors, as April is traditionally a month that yields low levels of activity in the South African motor industry," said Wesbank.

However, Wesbank said that a number of other negative factors conspired to the extent that it believed that a score of 4.2 was likely to be the lowest it will see in this cycle, and that market sentiment was anticipated to start improving gradually.

Wesbank said that the indicator illustrated that the 'very active' and 'active' sentiment continued to reduce, with 90% of respondents now believing the industry is inactive.

It said that the inactivity in the market was further supported by the decrease in the number of new passenger vehicle sales reported by Naamsa in the first four months of 2009.

Respondents believe that credit-related factors such as bank approvals, the increased cost of living, outstanding debt and the NCA are the main drivers affecting current activity levels.

Added to this, higher vehicle prices, generally weak consumer confidence and prevailing low trade-in values affect the negative sentiment that prevent customers from making purchasing decisions on big ticket items such as new vehicles.

"Although we have seen a decrease in petrol prices and interest rates since the beginning of 2009, market commentators believe the positive impact of both of these economic factors will only be seen towards the end of 2009," said Wesbank.

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