REUTERS

Cars travel on a main road in a traffic jam.

Results from the WesBank Vehicle sales Confidence Indicator (WVsCI) for the first quarter of 2011 reveal that overall confidence levels in sales activity among dealers were at their highest levels in the history of the indicator, which was launched in 2007.

Overall confidence levels in sales activity on dealer floors grew to 6.5 out of 10 in January 2011 from 5.7 in October 2010. 59% of dealers surveyed in the current quarter reported that sales activity was either "active" or "very active", compared to only 30% in the fourth quarter of 2010.

The first quarter of 2011 also saw the most prominent positive movement in current activity levels reported by dealers. 29.5% more dealers reported that they were currently active or very active than in the previous quarter.

According to Chris De Kock, Executive Head of Sales and Marketing at WesBank, confidence levels reflect the increased market performance. According to recent figures released by Naamsa, 45,135 new vehicles were sold in January 2011 compared to 38,075 and 32,963 in 2010 and 2009 respectively.

The latest results also reflect a significant increase in confidence and activity in the new vehicle market. According to the data, 57.7% of dealers surveyed in January 2011 said they would describe the new vehicle market as more active than the used vehicle market, compared to 14.6% in October 2011. Conversely, the percentage of dealers who said the used vehicle market was more active than the new fell from 61% to 29%.

Data from the WesBank book confirms this shift. Since October last year, WesBank's new to used ratio increased from 1.91 to 1.51 used cars for every new car financed.

According to De Kock, the combination of a strong rand, a 30 year low interest rate, rising used vehicle prices and increased new vehicle stock availability has led to new vehicles becoming more attractive to active consumers.

According to De Kock, the positive trend seen in the 1st quarter of this year will continue throughout 2011, predicting moderate double digit growth in vehicle sales for the remainder of the year.

"We see no immediate interruptions on the supply side, while consumers are on a good wicket on the demand side. WesBank's approval rate has increased by 11% since October last year which can be attributed to the better quality applications we have received.

"In addition, WesBank's own book shows a consistent decline in repossessions since the last quarter of 2009.

"We have noticed improved debt to income ratios compared to that of last year which are favourable factors likely to influence the upward trend in the vehicle sales market for 2011," De Kock said. - I-Net Bridge