Wednesday, November 11, 2009

Debt shackles new car sales

SHOOT: Credit has evaporated, and it isn't wise to bring it back when more and more people are losing their jobs. The reality is that things have changed, and we're facing economic contraction across the board.
clipped from

Wesbank said that the single biggest obstacle to the recovery of the sector was high levels of indebtedness among South Africans. The country's household debt to disposable income ratio stands at around 76% this year.

Meanwhile, another key characteristic of the consumer vehicle market remained sustained demand for used cars. The used car market had experienced increased popularity in the downturn.

Wesbank's research found that 87.6% of respondents found the second-hand market more active than the market for new vehicles. This figure is up from 81.7% in July.

The used car market had helped numerous car dealerships pull through the recesson. However, De Kock has warned that the market was facing stock shortage problems.

This was because fewer repossessed vehicles were finding their way to showroom floors and consumers were choosing to hold on to their cars for longer.

"You can't lend freely when there is still relative uncertainty about the economic circumstances."

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