TransUnion: Tougher times ahead for auto industry
Johannesburg – 13 Nov. 2012 – While 2012 has so far been a relatively good year for the South African automotive industry this trend is unlikely to be sustained through 2013, according to vehicle risk intelligence company TransUnion Auto Information Solutions.
This assertion was one of the key messages from Carel Martin, Executive – Sales, at TransUnion Auto, who presented to motor and associated industry representatives attending the biannual TransUnion Auto Trends Forum in Melrose Arch today (Tuesday 13 November, 2012).
The good news, Martin noted, was that new vehicle sales to date were some 10% up from the same period in 2011; the major dealer groups had experienced improved financial results on the back of higher sales volumes and continuing cost control; and increased business volumes whilst a decline in vehicle finance bad debt had also resulted in improved results for finance houses.
“But all is not rosy as dealer confidence levels are decreasing when compared to those seen over the past two years,” Martin said. “There is good reason for this as consumer debt continues to grow and reports indicate that households are experiencing further strain. Other factors Martin noted that may pressure the automotive industry include:
- Rising fuel prices
- Introduction of toll fess for Gauteng drivers
- Stabilised vehicle sales volumes
“Despite these challenges, it is important to understand that continued support programmes from manufacturers coupled with low interest rates could potentially boost consumer credit demand,” added Martin,
Taking all factors into account, including the fact that the low 2012 price increases, which contributed to the 2012 growth, were unlikely to be sustainable into 2013 as a result of the weakening Rand and higher input costs, TransUnion Auto’s expectations for 2013 were less optimistic.
Commenting on the outlook for the used car market, Martin predicted continued pressure for dealers – evidenced by the fact that dealers were continuing to sell used vehicles below the TransUnion Auto Dealers’ Guide retail price in an attempt to counter the large new vehicle price discounts and incentives.
Martin questioned whether the current downward trajectory on used vehicle gross margins, which had been a feature of the market over the past two years, would continue. Margins appeared to have stabilised after the average percentage gap between trade and retail values reached its lowest level in the past four years in June 2012.
“Given the current market conditions, based on positive trends, constant supply and relative price stability seen in 2012, we can expect 2013 to deliver some growth, although it should be less than what we’ve seen in the past two years,” Martin concluded.
As a global leader in information and risk management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering high quality data, and integrating advanced analytics and enhanced decision-making capabilities. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. TransUnion reaches businesses and consumers in 32 countries around the world. Based in Johannesburg, with global headquarters located in Chicago in the US, TransUnion is one of Africa's oldest credit bureaus. Visit www.transunion.co.za orwww.mytransunion.co.za for more information.
TransUnion Auto Information Solutions is South Africa’s leading provider of information solutions for the automotive industry. The company has built its reputation as the trusted source in vehicle risk intelligence over many decades, producing vehicle values for the motoring and associated industries for 50 years and vehicle verification reports for 30 years. http://www.transunion.co.za/za/business/industrySolutions/automotive.html