Picture: SOWETAN
Picture: SOWETAN

CONFIDENCE at vehicle dealerships remained flat in the fourth quarter of this year, financial services provider WesBank said on Wednesday.

Its quarterly dealer confidence survey found dealers "mixing together" the two extreme realities of strong sales off showroom floors and a nonetheless gloomy economic outlook to end up with a "flat result", said Chris de Kock, head of sales and marketing at WesBank.

As a result, Mr de Kock said, WesBank expected sales growth to remain flat next year.

"Overall confidence levels in sales activity among dealers remained unchanged at six out of 10. Confidence in future sales activity was barely changed at 6.5 and 6.7 for the next three and six months, respectively, compared with 6.5 and 6.8 in the previous quarter," the company said.

"Dealers have enjoyed some fantastic success," Mr de Kock said, citing historically low interest rates, low vehicle inflation and heightened competition among manufacturers.

However, dragging the index down was a more general concern about the economic situation in South Africa and globally.

"Guys are seeing difficulties on the horizon," Mr de Kock said, adding that the weak rand was a serious problem that would start to affect vehicle price inflation, "especially for importers from Japan and (South) Korea".

Added to "utilities inflation", Mr de Kock said, this could lead to "interest rate deterioration".

He also said new car sales figures had been propped up by used car prices high enough that consumers often opted for a new car at a very competitive price. This, however, was also changing.

"The used market is making a comeback. The market is up 15% in the past quarter," he said, adding that lower trade-in values were helping "re-establish the price gap" between new and used vehicles. This was doubly damaging to the new market, as car owners refused to sell their cars at these lower prices.

"Twelve percent of dealers said that a low trade-in price was also a factor in preventing consumers from closing a deal on a new vehicle," WesBank said.

"Reflecting recent events, 16% of dealers said strikes and labour unrest would have a negative effect on future activity, while 11% cited political stability and elections, neither of which were highlighted in the previous quarter," the company added.