Wesbank predicts car sales growth

Photo: REUTERS

Westbank predicts ontinued strong growth in vehicle sales in SA this year.

ALEXANDER PARKER

Published: 2011/03/29 07:02:00 AM

ASSET finance giant Wesbank yesterday predicted continued strong growth in vehicle sales in SA this year .


It expected overall sales to grow 15,2% to 567850 units for the year, it said.


Wesbank’s prediction is in line with positive sentiment for the industry this year.


The company said the economy was geared for growth. "Capital inflows remain healthy, while interest rates remain low with a half-percentage-point increase probable towards the back end of the year," it said. "Corporate profits are generally healthy with corporate listings and activity on an upward trend."


The increase in sales predicted for this year was a "return to par" after the market overcorrected in 2009.


Wesbank CEO Brian Riley said yesterday: "… if one plots vehicle sales against interest rate movements over many years, we have a minimum of seven growth quarters ahead of us. The buy-down will continue with the higher LSM (living standards measure) segments leading the way .


"We suggest that passenger vehicle sales will be up 15% on the back of a strong rand, plenty of new models and a shortage of late model used cars," he said .


He was referring to the buy- down phenomenon, in which people replace their car with a cheaper, less powerful model.


Very poor sales of new cars in 2009 has led to a shortage of one- or two-year-old used cars, driving new buyers into the new-car market, Mr Riley said. "Although debt-to-income levels remain high, there are still (more than) 10-million customers out there with good credit records, which is only 7,6% down on the peak in June 2007," he said. With Sapa