Chris de Kock, WesBank’s sales and marketing director, said the repossessions of cars had spiked in this period but had flattened since then, and were expected to remain at high levels for another quarter before dropping further.

De Kock said his company had seen a flattening in levels of repayment.
“This is attributed to consumers with little chance of surviving the economic cycle, having already been washed out of the system. WesBank had more than 1 million customers, during the release of our latest vehicle sales confidence indicator,” he said.

This was a good indicator of the level of repossessions it would have in the months ahead he said. De Kock said there was normally a lag of six to 12 months, sometimes up to 18 months, between a rise in interest rates and its effect on the new car market.

However, De Kock added that rates had been raised on a consistent basis, resulting in the effect being evident much quicker. "We have seen it in our [loan] book, with our level business and in our repossessions," he said.
WesBank is South Africa’s largest vehicle and asset finance house.

The mobility costs of consumers had increased by 40% in the past four years because of a combination of higher interest rates, insurance premiums and fuel costs, while total monthly maintenance costs had declined because maintenance plans were increasingly included in the price of the vehicle.

Meanwhile WesBank had seen vehicle sales confidence indicator, falling to 5,1 points in the first quarter from 5,4 points in the fourth quarter of 2007.

The indicator, which polled 500 vehicle sales staff, finance and insurance people, measures confidence on a scale of 1-10 with the highest score indicating an upbeat market and the lowest score indicating a subdued market.

"Given the rate hike and fuel increase, the South African vehicle sales market has fallen on tough times. With the bleak economic picture that is being painted by many commentators, the positive future outlook of dealers may be misplaced," Wesbank said.

In the medium term, Wesbank said the respondents' expected the market to pick up slightly with the indicator reading rising to 5.2 in the next three months before climbing to 6.1 by this time next year.

"This seems optimistic given predictions that, even without the current proposals on electricity pricing not taken into considerations, CPIX is only expected to return to the target levels in the last quarter of 2009," Wesbank said.


Keywords:  south_africa business