Pretoria - Increased affordability pressure on consumers has resulted in an increasing percentage of them taking advantage of new National Credit Act (NCA) stipulations that allow them to finance new vehicles without paying a deposit, and to finance them over a longer period.
The NCA has led to banks rejecting many applications for further credit from overburdened consumers. However, it has also created an opportunity for consumers who previously could not buy a vehicle because they did not have the minimum 10 percent deposit, despite being able to afford the monthly repayments, to now enter the market.
The NCA also made private leasing legal, which involves paying for the use of a vehicle over a certain period, subject to conditions such as regular servicing and good maintenance, rather than taking ownership of it.
Private leasing has increased the potential for new buyers to enter the market, as customers get complete funding.
Brian Riley, the chief executive of Wesbank, said yesterday that 32 percent of the bank's deals were now done without customers putting any money down at the beginning of the finance agreement, compared with 14 percent at the beginning of the year.
Prior to the NCA, deals without a deposit were permissible only for customers who had a car allowance.
Riley added that longer finance contracts stretching to 60 months now made up more than 14 percent of its deals. Prior to the introduction of the NCA, 54 months was the maximum vehicle finance agreement term.
Riley's comments coincided with the release of the new vehicles sales figures for last month.
Figures released by the National Association of Automobile Manufacturers of SA (Naamsa) revealed that new car sales last month slumped by 14 percent to 32 432 units from the 37 775 units sold in September last year.
Sales of new light commercial vehicles, bakkies and minibuses declined by 11 percent to 14 739 units and medium commercial vehicle sales by 21 percent to 1 181 units.
However, heavy truck and bus sales rose by 8 percent to 1 836 units in the same period.
Tony Twine, a motor industry analyst and director of Econometrix, said there was a temptation to lay a lot of the blame for both the monthly and annual decline in sales at the door of the recent strike, but that would ignore the generally tighter economic environment, particularly the credit environment. "Clearly both contributed to the decline in sales but trying to precisely allocate the blame was a tall order," he said.
But Twine was adamant the strike had depressed new vehicle sales. Passenger vehicle sales reported to Naamsa were 14.1 percent lower year on year while car sales by Associated Motor Holdings (AMH), which are not exposed to local content, declined only 2.2 percent.
Johan van Zyl, the chief executive of Toyota SA, said vehicle sales last month were subdued as buyers, particularly those in the private sector, lost their appetite for credit.
Brand Pretorius, the chairman of McCarthy Motor Holdings, believed the decline in sales could be attributed mainly to lower levels of business confidence and the combined negative impact of six consecutive increases in the prime rate and the introduction of the NCA.