JOHANNESBURG – Cash-strapped car buyers are becoming less brand loyal, buying what they can afford rather than what they aspire to, says WesBank head of research Rudolf Mahoney.
The average finance period for cars and sports utility vehicles has stretched to nearly six years, but many consumers are trading in their vehicles barely halfway through the period. This is more than a year before the “tipping point”, when the vehicle’s resale value balances out the debt owed.
“There is incredible trade-in assistance from manufacturers to help customers get out of existing deals,” Mahoney said on Monday.
“People still want to change cars every three years and obviously they want to do it without having to pay more on the old one. The best trade-ins win market share.”
Some were going for base entry-level cars such as the Datsun Go. Increasingly they were opting for used cars rather than new.
Mahoney said last month WesBank recorded a 15% increase in applications for used cars, and 7% for new vehicles. He was speaking after the release of the motor industry’s February new-vehicle sales.
The figures, compiled by the National Association of Automobile Manufacturers of SA, showed a 1,1% improvement on February last year, with cars up 1,5% and light commercials 1,8%. Medium and heavy trucks, however, were down.
“Commercial vehicle sales performance is likely to be affected by relatively low economic growth and fragile business confidence,” Investec said.
“Moreover, delays in the roll-out of major government infrastructure projects will impede the sales performance of heavy commercial vehicles.”
Combined, sales of all new vehicles over the first two months of the year were down 0,1% on the corresponding 2014 period.
Mahoney said he expected sales of passenger vehicles for the year as a whole to rise 1% to 2% at best.
There are no such concerns for exports. Thanks to Mercedes-Benz South Africa (MBSA) being back to full production with the new C-Class, SA’s new-vehicle exports grew 35,6% February on February, from 21 941 to 29 760. Cars were up 95,3%, from 9 589 to 18 724.
Bakkie exports were down 10,8% but this represented something of a comeback from January’s 28% collapse — mainly as the result of budgetary issues in African countries.
Having exported 738 Ranger bakkies in January, Ford more than quadrupled from last month, to 3 269.
Toyota, whose main export is the Hilux, grew shipments by more than 50%, from 4 201 to 6 975.
Besides MBSA, which exported 6 668 cars, the other main exporters were Volkswagen, which sent 5 727 Polo cars overseas, and BMW, which sent 5 656 3-Series.
– BD Live