Vehicle dealer confidence hits 18-month low

Confidence levels in sales activity fell to 6.0 points out of 10 compared to 6.4 points in the previous three months.

But WesBank executive head of sales and marketing Chris de Kock said on Wednesday (23 May 2012) the decline should be viewed in comparison to the long-term average, which had been consistently below 6.0 points.

"In January there was a lot of anticipation of another strong year for vehicle sales and while we have seen continued growth of around 6%, this is below the growth recorded in 2011 and reflects the slightly lower optimism among dealers," he said.

On factors that may prevent consumers from completing a purchase, 32.2% of dealers cited a combination of the effects of the National Credit Act and outstanding debt compared with 24.7% in the previous three months, continuing a steady rise over the last year.

However, De Kock noted that according to WesBank book data, on a quarterly basis the approval rate has improved and remains above the average recorded over the last three years, indicating that the number of approvals remained stable.

"An interesting development that we have seen in the last quarter is dealers citing concern by customers on a range of affordability issues, such as fuel prices and e-tolls, as well as the cost of insurance. 26.2% of dealers also said fuel prices will have the biggest effect on future activity compared with just 3.9% in the previous quarter."

Confidence levels on future sales activity for the next three and six months declined from the previous quarter.

The statistics also showed that 26.6% of dealers cited new products and stock supply as likely to have the biggest positive impact on future activity. "In comparison to April 2011, automotive manufacturers have introduced significantly more new vehicle models into the market, with 39 new models launched in April 2012 compared with 32 in the same period a year earlier."

De Kock noted that the shift from new to used vehicles also continued. In the previous quarter when 68% of respondents said the new vehicle market was more active compared with 61% in the current quarter. "We are seeing a rebalancing taking place in the market following a strong performance in new vehicle sales over the last two years."

The vehicle financier still expected single digit growth in new vehicle sales this year, off the higher base of 2011.