Standard Bank Sydney Soundy


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The South African new car market is bucking the economic trend with sales increasing by 4.1% to 163 092 units during the first three months of 2013 when compared to the same period last year. This is despite tough economic conditions, with the South African Reserve Bank expecting GDP to grow by only 2.7% during 2013.

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Standard Bank Sydney Soundy

  1. 1. Standard BankVehicle and Asset FinanceSydney Soundy
  2. 2. ContentsEconomic IndicatorsVehicle Market TrendsConsumer Behaviour Trends
  3. 3. Economic Indicators
  4. 4. GDP Rand Value and % GrowthSource: Neal Bruton & SARBGDP growth has been relatively subdued over the last 3 years, with expected 2013 GDP at2.7% (SARB).Real Gross Domestic Product of South AfricaAnnualised % Change vs Rand Value3-
  5. 5. CPI and PPISource: Neal BrutonCPI and PPI are experiencing upwards pressure.
  6. 6. Historical fuel price changeSource: Department of EnergyThere has been a 258% and 376% increase in petrol & diesel prices since 2001. Whencomparing to 2010, the prices have risen by 69% in petrol and 74% in diesel.
  7. 7. Household Debt as % of DisposableIncome of HouseholdsSource: Neal BrutonThe average South African is still highly indebted.Household Debt as % of Disposable Income ofHouseholds455055606570758085Mar-90Mar-91Mar-92Mar-93Mar-94Mar-95Mar-96Mar-97Mar-98Mar-99Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05Mar-06Mar-07Mar-08Mar-09Mar-10Mar-11Mar-12%
  8. 8. Credit Extended to the PrivateSectorCredit extensions are experiencing relatively flat growth over the last year.Source: Neal BrutonAnnual Change in Credit Extended to thePrivate Sector(5.00)-5.0010.0015.0020.0025.0030.00Jan-94Jul-94Jan-95Jul-95Jan-96Jul-96Jan-97Jul-97Jan-98Jul-98Jan-99Jul-99Jan-00Jul-00Jan-01Jul-01Jan-02Jul-02Jan-03Jul-03Jan-04Jul-04Jan-05Jul-05Jan-06Jul-06Jan-07Jul-07Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13%
  9. 9. Personal Savings Ratio (PersonalSaving / Disposable Income)Source: Neal BrutonSouth African’s have had negative savings since 2005, this is not sustainable.Personal Savings Ratio ( Per Sav / Per Disp Inc )-4-2024681012 Mar-85Dec-85Sep-86Jun-87Mar-88Dec-88Sep-89Jun-90Mar-91Dec-91Sep-92Jun-93Mar-94Dec-94Sep-95Jun-96Mar-97Dec-97Sep-98Jun-99Mar-00Dec-00Sep-01Jun-02Mar-03Dec-03Sep-04Jun-05Mar-06Dec-06Sep-07Jun-08Mar-09Dec-09Sep-10Jun-11Mar-12%.
  10. 10. JSE Trend and Car Sales CycleSource: Neal BrutonThe JSE has shown good growth since the economic downturn, which has been supportingwealth invested in the market.Total New Car Sales Cycle vs JSE All Share Index1200017000220002700032000370004200047000Jan-90Jan-91Jan-92Jan-93Jan-94Jan-95Jan-96Jan-97Jan-98Jan-99Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-132000700012000170002200027000320003700042000AllShareIndexTotpas Sales Cycle JSE All Share Index
  11. 11. Monthly Prime RateSource: Neal BrutonPrime rate at its lowest level in history, this is contributing to increased credit extension in themarket.Monthly Prime Rate5.0010.0015.0020.0025.0030.00Jan-80Jan-82Jan-84Jan-86Jan-88Jan-90Jan-92Jan-94Jan-96Jan-98Jan-00Jan-02Jan-04Jan-06Jan-08Jan-10Jan-12Jan-14%
  12. 12. Vehicle Market Trends
  13. 13. Make Up of the BA900 InstallmentDebtors and LeasesSource: SA Reserve Bank & VAF FinanceThe growth in the VAF market has been driven primarily by the Individual market. Individualscontribute 72% of the total financed installment and lease book.050100150200250300350Apr-06Aug-06Dec-06Apr-07Aug-07Dec-07Apr-08Aug-08Dec-08Apr-09Aug-09Dec-09Apr-10Aug-10Dec-10Apr-11Aug-11Dec-11Apr-12Aug-12Dec-12The Market Individual Market Business Market100%72%28%
  14. 14. New Passenger Car Sales CycleSource: Neal BrutonTotal New Passenger Car Sales Cycle1970 Onwards1000015000200002500030000350004000045000500001970-01Jan-71Jan-72Jan-73Jan-74Jan-75Jan-76Jan-77Jan-78Jan-79Jan-80Jan-81Jan-82Jan-83Jan-84Jan-85Jan-86Jan-87Jan-88Jan-89Jan-90Jan-91Jan-92Jan-93Jan-94Jan-95Jan-96Jan-97Jan-98Jan-99Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13MonthlyMarket.Market Forecast Incl Non Reps Trend Cycle Forecast Incl Non Reps2 million new cars sold Jan 2007 to July 2012The new passenger car cycle is almost back at levels experienced in 2006 and 2007. There are over9,797,413 registered vehicles in South Africa in 2010 (Drive Alive), including new vehicles and droppedoff YTD 2013, this would take the figure to around 10 million cars on the road.
  15. 15. Factors That Will Impact SalesGrowth Contrary to the main economic indicators, the new passenger marketis still experiencing some growth. Factors that are driving this growth:– Low interest rates.– Vehicle Price Inflation lower than CPI.– Positive wealth effect experienced in the JSE and house prices.– Relatively strong replacement cycle still being experienced in themarket. Factors moderating growth:– GDP growth at low levels.– Disposable income pressure from fuel prices, food prices, CPIinflation, and number of consumers with impaired credit records.– Exchange rate pressure could see these costs transferred ontothe customer in new vehicle market through prices increases.
  16. 16. Consumer Behaviour Trends
  17. 17. Engine SizeSource: RGT SmartSmall passenger vehicles have increased in size since August 2010, now comprising 64% (Jan –Dec 2012) of the total vehicles sold.Small: 0 – 1.7 LitresMedium: 1.8 – 3.0 LitresLarge: 3.1 – 8.0 Litres
  18. 18. Going Green: Fuel TypeComparisonThere seem to be two approaches to going green:• Attempts to maximize performance of existing technologies through performance capabilities e.g. BMW – EfficientDynamics, Mercedes – Blue Efficiency, VW – Blue Motion, Citroen – Airdream.• Introduce new cutting edge technologies and alternative powered engines.Source: RGT SmartHybrid models have grown in the last couple of years off a very small base.-100200300400500600700800900-500001000001500002000002500003000003500004000004500005000002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Diesel(LHS)Petrol(LHS)Hybrid(RHS)
  19. 19. Luxury MarketSource: RGT SmartLuxury vehicles have experienced a growing sales trend, showing the resilience in this sectorof the market even through the tough times.Luxury Vehicles:R300,000 – Above PriceRange
  20. 20. Affordability & Cash Flow Considerations –Original Term, Deposits & Residual ValuesSource: VAF Standard BankRequest for residual values have steadily increased, a drop in deposits has been experienced,whilst the term requested has also increased.
  21. 21. Affordability and Cash FlowConsiderations – Actual TermSource: TransUnion AISActual settlements have remained relatively flat over the last couple of years.
  22. 22. New and Pre-Owned Market TrendSource: TransUnion AISThere has been a downward shift in the New / Pre-Owned ratio from 2012.
  23. 23. Pricing Impact in New and Pre-Owned MarketSource: TransUnion AISThere is a widening gap between the used and new price change, with pricing in the new marketremaining relatively flat. This could see a shift towards the used market becoming more favorable.
  24. 24. Alternatives to Car OwnershipSource: VAF Standard BankRental and leasing agreements contribute a small % of the VAF Standard Bank market,although this trend is picking up in 2013.
  25. 25. Age DemographicsSource: TransUnion AIS62.4% of VAF deals concluded originate from the age groups 18 to 45 years old.
  26. 26. End