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Unlocking the lockdown on vehicle sales

vuyi on May 4, 2021

Sales during the first four months of the year remain 28.3% ahead of the corresponding period last year
– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance

April new vehicle sales told an inspiring story of the South African motor industry’s resilience, while also providing a harsh reminder of the bleak outlook experienced a year ago. With April 2020 sales essentially at a standstill as motor retailers stood closed, the rejuvenated picture a year later, while certainly reassuring, remains under pressure.

In percentage growth terms, the sales dam was over-flowing while the floodgates couldn’t keep up. According to naamsa | the Automotive Business Council, the new vehicle market grew 6,133.3% in April compared to April last year. However, the reality was a little more subdued when considering that April’s 35,779 sales were 17.6% lower than last month – 7,649 units less than March.

“April sales are difficult to interpret within the context of lockdown,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance

“April sales are difficult to interpret within the context of lockdown,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance.

“On balance, April sales lost less against March than March sales had gained against February, meaning the market remains in its state of slow recovery.” March sales had increased 18.4% over February.

Sales during April will also have been impacted by the numerous public holidays, providing fewer selling days during the month. “Reassuringly, however, is that sales during the first four months of the year remain 28.3% ahead of the corresponding period last year.

This is purely as a result of April volumes measured against the 574 sales recorded in April last year. Within this context, first quarter 2021 sales were 0.9% lower than 2020.”

Demand in the new vehicle market remains high
– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK VEHICLE AND ASSET FINANCE

The passenger car segment sold 22,911 units during April, 86.2% of which were retailed through dealers to consumers.

Dealer channel sales were relatively robust and are 27.3% ahead year-to-date. The segment was 13.9% down on March sales.

Light Commercial Vehicles (LCVs) by comparison were 24.3% lower than March, taking a harder knock – although year-to-date sales in the segment are 46.9% higher. Dealer channels sales in the segment accounted for 90% of sales.

“Demand in the new vehicle market remains high as judged by WesBank’s daily application rate,” says Gaoaketse. “While WesBank continues to finance more than twice the number of pre-owned vehicles than new, there is a marginal shift towards new car sales as experienced during April.”

Affordability remains a key purchase consideration, driving consumers towards the pre-owned market.

“Attractive incentives in the new vehicle market, however, as well as low-interest rates, are providing some stimulus to the new vehicle market,” says Gaoaketse.

A look at vehicle sales figures one year since lockdown began.

vuyi on April 6, 2021

As the country observed the first-year anniversary since lockdown commenced, new vehicle sales provided reason for the industry to celebrate.

Twelve months ago, the country reeled to news of the pending lockdown as showrooms prepared to close their doors, consumers headed home, and vehicles were only let out for essential services. In March 2020, the new vehicle market plummeted 29.7% compared to March 2019 to record just 33,545 sales. The grip on the South African motor industry had tightened quickly.

One year later, the resilient industry is fighting a hard recovery. But March 2021 sales put one of their best feet forward.

With interest rates remaining stable at their low levels, a constantly – albeit slowly – improving supply of imported vehicles, and a slightly healthier economy operating within eased levels of restrictions, we expect the market to continue recovering well.
– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance

“Reassuringly, March sales show a 18.4% increase over February this year, a number more indicative of the real strength of the market,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance. “With many of the brands indicating difficulty securing sufficient stock to meet demand, the new vehicle market seems to be well on its way to recovery.”

Passenger car sales were up 23.4% to 27,330 units year-on-year and 13.2% up on February 2021. With some renewed activity in the rental market, the consumer demand was noticeable with dealer sales in the segment up 24.2%.

Light Commercial Vehicles (LCVs) delivered a staggering 52.4% improvement over March last year to sell 14,375 units. This performance means the LCV segment is up 13.2% year-to-date and hopefully represents a surge in business confidence. The majority of activity in the segment remained on the showroom floor with dealers selling 61.1% more bakkies than they did a year ago.

“With interest rates remaining stable at their low levels, a constantly – albeit slowly – improving supply of imported vehicles, and a slightly healthier economy operating within eased levels of restrictions, we expect the market to continue recovering well,” says Gaoaketse. “While we have seen a significant increase in the average deal size financed by WesBank, we don’t expect new vehicle prices to increase dramatically. This will also provide added stimulus to the market and is a positive sign of consumer sentiment and ability to participate in the new vehicle market.”

The strong March performance made an encouraging impact on year-to-date sales. First quarter sales are just 0.9% down on the same period last year with 116,225 sales recorded during the first three months.

Demystifying vehicle finance lingo: Part 2

vuyi on March 11, 2021

It’s all very well to find a car that you both like and can afford, but you also need to understand all the financial jargon that comes with making the purchase.

There is no shame in admitting you don’t know about the warranty, total cost of ownership or service plan. While all these terms can be intimidating the first-time round, asking questions will ensure you become vehicle finance savvy.

Here’s the second installment of our 2-part guide to understanding vehicle finance jargon which will help you make the right choices:

“There isn’t a one-size-fits-all solution to structuring a car finance deal. By being totally honest with yourself and knowing how much you can realistically afford on the vehicle repayment, you are on the best-informed path to owning a car. As a responsible lender, WesBank will only provide credit for an amount that you can afford to pay back.”
– Kutlwano Mogatusi, WesBank Motor’s Communication Specialist

Total cost of ownership: As mentioned, there’s more to owning a car than paying the monthly instalment. You need to budget for the running costs too – fuel, insurance, licence, servicing, maintenance, tyres and brakes, tolls, maybe the odd speeding fine! It’s important to buy a car you can afford even if it’s not yet the car of your dreams.
Insurance: There are plenty of tempting insurance offers to choose from, however, WesBank recommends comprehensive insurance cover for a first-time car owner. This will cover you in the unfortunate event of accident damage, theft or vehicle write-off, plus you are covered for third party damage, which is damage to another vehicle in the case of an accident. The high risk of driving an uninsured vehicle is just not worth it.
Warranty: A new car usually comes with a manufacturer’s warranty that would cover a faulty fuel gauge for example, but not general wear and tear on the brakes. It lasts for a certain time period but the finance provider, such as WesBank, can extend the warranty period, and can also offer you a warranty when buying a used car.
Service plan: Usually covering the cost of a standard service, a service plan pays for your car’s regular services at set intervals (period of time or kms driven) as stipulated by the manufacturer. Be sure to understand what repairs or parts are excluded from the plan to avoid a nasty bill following a service.
Maintenance plan: Maintenance plans differ in what they offer but most include the cost of servicing plus general vehicle wear and tear repairs to keep your car running efficiently. Again, make sure you are 100% clear on exactly what the plan covers and what is excluded.

“Now that you understand the jargon and consider yourself to be vehicle finance savvy, all that’s left is to check the vehicle finance agreement, including the small print, and sign on the dotted line – but, only once you’re satisfied with all the terms and conditions. Then, you are ready to safely take to the open road in your very own car,” says Mogatusi.

Demystifying vehicle finance lingo: Part 1

vuyi on March 11, 2021

It’s all very well to find a car that you both like and can afford, but you also need to understand all the financial jargon that comes with making the purchase.

There is no shame in admitting you don’t know what a balloon payment is, or the difference between fixed and linked interest rates. While all these terms can be intimidating the first-time round, doing research will ensure you get the best financial deal on your set of wheels.

Before you get to the part where you drive off in your car, let’s get back to understanding the payment deal to make sure you sign up for the best financial plan that suits your needs and more importantly, your pocket.

“Car ownership is more than the initial price tag. A customer will need to consider monthly repayments, plus the added costs of fuel, comprehensive insurance cover and general maintenance and service expenses when buying a car.”

– Kutlwano Mogatusi, WesBank Motor’s Communication Specialist.

Here’s the first of our 2-part guide to understanding vehicle finance jargon which will help you make the right choices:

1. Interest rate: The interest rate affects the amount a bank charges you for borrowing money and the amount you need to pay back is determined by the interest rate on your finance agreement. The current low interest rate is good news for anyone repaying a vehicle finance loan.

2. Fixed or linked interest rate: You can choose between a fixed or linked (variable) interest rate on your vehicle finance agreement. As it says, a fixed interest rate remains the same, as does your monthly instalment. A linked rate fluctuates with the prime interest rate set by the South African Reserve Bank – if the rate increases, so will your payment but if the rate goes down, you will benefit from a lower monthly payment.

3. Deposit: This is a cash amount you pay upfront before the vehicle finance agreement starts. This amount is deducted from the price tag, so it makes sense that the bigger the deposit you can pay, the less you will owe on the car in the long run.

4. Finance period: The finance period is the length of time you agree to in the contract to pay off the car. It affects your monthly instalment and interest amount. A longer period may mean a lower instalment but the interest adds up so you could end up paying more. A shorter payment period might incur a slightly higher monthly payment but lessens the interest paid out in the long term, which is a good thing.

5. Balloon payment: A balloon payment is a lump sum amount that still needs to be paid at the end of the vehicle finance contract. So, on the upside, while it reduces your monthly instalment for the contract period, you will need to settle it in full at the end, so be cautious of this payment option. Because you may end up paying more interest in total in the long term, you need to make sure you have budgeted and saved enough to pay off the outstanding balloon payment. This amount however can now be refinanced, which will extend your term to pay back the car loan.

The Real Costs of Vehicle Ownership and Maintenance

vuyi on March 8, 2021

With interest rates currently at a record low, one might assume that vehicle owners today would have more money in their pockets.

With interest rates currently at a record low, one might assume that vehicle owners today would have more money in their pockets. However, these savings have been largely negated with the financial strain placed on many consumers due to the country’s various lockdown levels since the COVID-19 virus broke in March 2020. This includes managing the actual costs of vehicle ownership within the total monthly household budget.

Even if a car is being driven less frequently, fixed monthly payments, remain and need to be included in the monthly household budget,
– Lebogang Gaoaketse, WesBank Motor Head of Marketing and Communication.

The impact of the global pandemic has resulted in a growing trend to work remotely, with many people still either electing to or being required to work from home. One of the outcomes of this new blended working arrangement is a reduced usage from consumers who own cars. As a result of this, it is likely that the annual kilometres driven will have reduced considerably over the past year.

“While the current low interest rates and savings on general vehicle maintenance and fuel consumption is positive news for car owners servicing a vehicle finance loan, it is important to understand the total monthly costs of vehicle ownership. Even if a car is being driven less frequently, fixed monthly payments, such as the vehicle finance repayment terms and insurance costs, remain and need to be included in the monthly household budget,”says Lebogang Gaoaketse, WesBank Motor Head of Marketing and Communication.

Looking at an average entry-level vehicle that travels approximately 2,500 kilometres per month, the monthly cost of the vehicle ownership basket, comprising of instalments, fuel, insurance and maintenance fees, has decreased to R7,584 in 2020 from R 7,851 in 2019, as a result of the lower interest rates and fuel consumption. While this reflects a percentage decrease of 3.41% year on year, the 2020 average figure is 15.5% higher than five years ago, when the monthly cost averaged R6,564 in 2016.

It is important to remember that this monthly vehicle ownership basket figure is based on data that constantly shifts…
– Lebogang Gaoaketse, WesBank Motor Head of Marketing and Communication.

These costs are reflected in the WesBank Mobility Calculator, a tool that tracks and calculates motoring expenses. The total basket of costs comprises all the fees associated with vehicle ownership: the monthly instalment, comprehensive insurance premium, fuel and maintenance fees. These expenses are updated regularly to reflect current inflation and interest rates, and other fluctuating costs.

“It is important to remember that this monthly vehicle ownership basket figure is based on data that constantly shifts in relation to market activity and is thus intended as a guideline only. The economic impact of COVID-19 last year will have created an anomaly in relation to the 2019 data, so this should also be taken into consideration when looking at the total figure for 2020,”notes Gaoaketse.

The bad news however is that vehicle prices continue to rise, with the TransUnion SA Vehicle Pricing Index (VPI) for Q4 2020 indicating an increase in the costs of both new and used vehicles. The VPI for new vehicles rose to 9.6% in Q4 2020, from 2.9% in the same period in 2019, with the used vehicle price rising to 2.9% from 1.2% in Q4 2019. With the CPI sitting at 3.3% for Q4 2020, new vehicle price increases remain above inflation, and are forecast to increase further in the coming months, according to the latest TransUnion SA VPI data.

“As a result of the vehicle price inflation over the past year, consumers have spent more on average for new and used vehicles in 2020, and this trend is likely to continue into 2021. In January this year, the average value of a new vehicle financed through WesBank was R358,390 compared to January 2020 when the figure stood at R327,723. This reflects a 9.4% year on year average price increase for new vehicles,” says Gaoaketse.

With vehicles being driven less since the first lockdown period in March last year, the average fuel spend is down 6%

During 2020, vehicle instalments and fuel spend remained the largest portions of the basket, accounting for 79% of the monthly spend. Fuel spend accounted for 34% of the total, with the vehicle instalment amount sitting at 45%. The figures for 2020 show monthly fuel spend averaged R2,566, with the instalment rate significantly higher at R3,433. The monthly insurance cost was R1,235 or 16% of the cost, with running costs per month accounting for 5% at R350.

This differs with the mobility basket in 2016, where fuel spend and vehicle instalment costs were more comparable – the average monthly fuel spend was R2,287, slightly lower than an entry-level vehicle’s net instalment of R2,976. The 2020 figures show that this is no longer the case.

“With vehicles being driven less since the first lockdown period in March last year, the average fuel spend is down 6% from R2,732 in 2019. However, this does not mean the overall cost of motoring is lower and, while interest rate cuts are always welcome, this alone shouldn’t influence a vehicle purchase.

Motorists should take a holistic view when planning a car purchase and ensure that their monthly budget can cover the instalment amount, insurance costs, fuel spend and savings for maintenance and services. The budget should also make allowances for increased costs down the line, such as a higher interest rate or a fuel price increase.

Relative stability in new vehicle sales

vuyi on March 1, 2021

February last year was the last normalised sales month before lockdown regulations sent the motor industry spinning.

February last year was the last normalised sales month before lockdown regulations sent the motor industry spinning. Back then, the market declined just 0,7% against 2019, a far cry from the 13,3% decline in sales experienced this February compared to it.

Relatively, that represents some form of stability this year compared to January’s decline of 13,9%. According to Naamsa – The Automotive Business Council, the market sold 37,521 units during the month.

“Interestingly, the correlation between market activity for WesBank between February 2020 and February 2021 is uncanny in its similarity,” says Lebo Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance. “Were it not for the seismic shift that came to bear in March last year, any market commentator would have been forgiven for ignoring its normality.”

WesBank made its highly anticipated market forecast for the year a few weeks ago, calling the market down 15,8% in normalised terms this year. In effect, that would represent a 12% growth compared to last year off the back of the lack of sales during the initial lockdown and the slow recovery for the remainder of last year. “These figures will begin to make more sense from March, but will equally present a skewed picture given the interrupted sales picture of last year,” said Gaoaketse.

Light Commercial Vehicle (LCV) sales continued to buoy the depressed market picture. The segment’s 11,246 sales were 3,2% lower than February last year. Even more reassuringly, dealer sales in this segment showed a 1,1% increase in activity, accounting for 10,080 of those sales.

Passenger cars by comparison declined 18,1% to 24,270 units. While the rental market remained subdued, down 27,8%, the vast majority of its purchases were passenger cars: down 28,9%; but with 3,498 units injected into the market volume.

“The relative stability in the market during the first two months of the year should provide some level of relief for the industry,” said Gaoaketse. “Month-on-month, February sales show a fairly significant improvement compared to the first month of the year. With consumers better-adapted to the pandemic and living rhythm in the country, low interest rates continuing to assist indebtedness, and economic sectors slowly returning to more regular operations, there is much to be hopeful for the South African motor industry,” says Gaoaketse.

New Land Rover Defender named best Premium SUV at #CarsAwards

vuyi on February 18, 2021

The new Land Rover Defender 110 D240 HSE drove away winner of the Premium SUV category at the annual Cars.co.za Consumer Awards – powered by WesBank this week.

The Premium SUV category is open to all large SUVs on sale from priced between R1,000,000 and R1,500,000 which offer all-wheel drive as standard equipment.

The new Range Rover Evoque P250 R-Dynamic SE also proudly took second place in the Executive SUV category open to all SUVs priced between R800,000 and R1,000,000.

Finalists in the definitive automotive awards programme are selected from the entire passenger vehicle market. The scoring process is based 50 percent on a panel comprising 14 guest judges, together with the Cars.co.za editorial team. The remaining 50 percent is determined by rankings achieved in an Ownership Satisfaction Survey conducted in partnership with data specialists Lightstone Consumer.

Where winners of the individual vehicle categories are decided by a combination of judging panel scores and consumer data, the prestigious Brand of the Year award is determined entirely by market data and findings of the Ownership Satisfaction Survey which includes respective sales and after-sales service ratings from thousands of South African vehicle owners.

Here Land Rover/Range Rover climbed 12 positions from its results in the 2019/20 #CarsAwards to achieve a respectable second runner-up podium finish.

Vehicle Finance 101: What You Ought To Know About INSTALMENT FINANCE

vuyi on November 24, 2020

In the excitement of buying a new car, some people make the mistake of not fully understanding the best finance options available to them. In the second of our 3-part Vehicle Finance series, we talk about Instalment Finance.

The majority of South African drivers cannot afford to buy their cars outright and rely on vehicle finance from banks. There are a few different vehicle finance options available to customers, namely:

Balloon Payments
Installment Finance
Guaranteed Future Value

But how do you know which one is best for you? To help you make better-informed decisions, here is what you ought to know about Instalment Finance.

Instalment finance agreements come with fewer restrictions such as mileage and the condition of the vehicle, but monthly repayments will naturally be a bit more.
– GHANA MSIBI, CEO OF WESBANK MOTOR DIVISION

Instalment sales are by far the most common and simplest of the vehicle finance options.

Monthly repayments are calculated on the purchase price of a car, and payment terms can be structured into time frames of between one and six years. The longer the term, the lower the monthly instalment will be, but it’s important to remember that interest will increase proportionally to the length of the contract. As such, the total amount repaid to the bank will be more for a longer loan period than a shorter one.

“Instalment finance agreements come with fewer restrictions such as mileage and the condition of the vehicle, but monthly repayments will naturally be a bit more. The extra monthly cost does, however, pay off in the long run because once the payment term is concluded, the customer owns the car outright,” explains Msibi.

One of the most important pieces of advice WesBank has for customers, regardless of which of the three finance options is chosen, is to begin with a healthy deposit. Any money put down upfront will automatically mean lower monthly instalments and less interest, combined with a lower outstanding balance at the end of the contract in the case of balloon payments or GFV deals.

“Any dealership that offers finance through WesBank has a registered Finance and Insurance (F&I*) consultant to guide buyers and explain the different finance options,” concludes Msibi. “These experts can propose which option is most suitable for each respective customer and will offer financially sound advice on what you can and cannot afford,” says Msibi.

* All F&I consultants are regulated by the Financial Advisory and Intermediary Services (FAIS) Act and the National Credit Act (NCA).

Vehicle Finance 101: What You Ought To Know About BALLOON PAYMENTS

vuyi on November 23, 2020

In the excitement of buying a new car, some people make the mistake of not fully understanding the best finance options available to them. In the first of our 3-part Vehicle Finance series, we talk about Balloon Payments.

Balloon Payments
Installment Finance
Guaranteed Future Value

But how do you know which one is best for you? To help you make better-informed decisions, here is what you ought to know about Balloon Payments.

For those in the car market, right now is actually a great time to buy thanks to the current low-interest rates combined with some tasty offers from car dealers around the country.
– Ghana Msibi, CEO of WesBank Motor Division

Balloon payments

This is a convenient solution designed to assist the buyer with cash flow at the start of a finance agreement.

A portion of the purchase price is set aside in order to lower monthly repayments, but it’s important to remember this deferred amount will still be owed to the bank at the end of the contract term.

Balloon payments require discipline to be used effectively, and customers opting for this arrangement should make sure they’re saving enough cash every month to settle the debt once the instalment period is complete.

While the benefits that come with keeping monthly costs down may be extremely appetizing, it is important not to view a balloon deal as a way to get into a car you simply cannot afford.
– GHANA MSIBI, CEO OF WESBANK MOTOR DIVISION

Think of a balloon payment as a deposit, but one that’s put down at the end of the contract term instead of at the beginning. Depending on the size of the balloon, the money saved on the monthly payments should more than cover the cost of interest for a loan to refinance the lump sum of debt at the end of the term.

In other words, saving the money yourself while driving the financed vehicle could be cheaper than it would be to apply for another bank loan to pay off the outstanding debt owing on the car.

“While the benefits that come with keeping monthly costs down may be extremely appetizing, it is important not to view a balloon deal as a way to get into a car you simply cannot afford,” says Msibi.

“A looming lump sum after years of driving a vehicle is easy to ignore and forget, but settling that debt is ultimately the responsibility of the buyer. That said, a balloon payment has some great advantages if used properly.

* All F&I consultants are regulated by the Financial Advisory and Intermediary Services (FAIS) Act and the National Credit Act (NCA).

New Versus Pre-Owned – Which Car Is Right For You As A Graduate?

vuyi on October 20, 2020

Affordability may be the most important factor to consider when deciding what car to buy
– Lebogang Gaoaketse, WesBank Head of Marketing and Communication

As a first time buyer, it is easy to get overwhelmed, or even carried away, with the reality of purchasing your first car. You may get the feeling that everything is aligning in your life to get your first set of wheels, but there are many things to consider when making this budget-impacting purchasing decision.

One of these could be your lack of credit score if you have only recently entered the job market. Under normal circumstances, this could be a negative consideration when trying to raise finance to buy your chosen car. However, thanks to finance offerings such as WesBank Graduate Finance, this is one less thing to worry about. The application process to check affordability and get approval for a vehicle finance deal can be done online, and it only takes a few minutes.

”Affordability may be the most important factor to consider when deciding what car to buy, but there is another important decision to make. This is deciding whether to get a new or a pre-owned car. While your dream car may be the latest flashy model on the showroom floor, with all the added extras including cool rims and a high-end sound system, the reality is that you need to buy within your budget,” says Lebogang Gaoaketse, WesBank Head of Marketing and Communication.

“That might just be the pre-owned car next to your dream car that is in great condition, has low mileage on the clock and, most importantly, is affordable. It is a significant choice for you to make because each option carries its own set of considerations. Talk about adulting, right?”

You also need to remember that there are more costs involved when buying your first car than the monthly repayments. While the right time to buy your first car could be now, affordability is key. Make sure you take into account all the expenses that come with independent mobility and act responsibly when making the financial commitment.

If you are considering buying a brand new car, budget permitting, WesBank advises that you place the most emphasis on getting value for your money. This includes not compromising on the car’s safety features such as ABS brakes and airbags, and what your needs are with regards to space and add-on extras. You need to also make sure that you understand the details of your contract. Buying your car from a licensed and WesBank approved dealership is recommended.

Nothing beats the smell of a new car, except perhaps the smell of a perfectly valeted pre-owned car that fits your budget more comfortably
– Lebogang Gaoaketse, WesBank Head of Marketing and Communication

In the case of a new or pre-owned vehicle purchased through a reputable dealer, you are likely to be offered an extended motor plan, service plan or warranty as part of the purchase agreement. These are insurance-related products and are aimed at protecting you from unforeseen costs down the line such as a vehicle breaking down.

It is advisable to consider including plans such as these, budget permitting, that offer a little extra peace of mind further down the road. These options can take some burden off your wallet when the time comes to pay for the car’s services and general vehicle maintenance after any standard maintenance plans and/or warranties expire.

Remember those other recurring financial obligations besides the monthly instalment we mentioned earlier? Fuel is an ongoing cost when driving around town, so consider a car that is fuel efficient. Taking out comprehensive insurance cover is a non-negotiable, and premiums can vary depending on the car you choose, so do some research with your insurance provider ahead of signing. You may also consider installing a vehicle tracking device as an additional security measure and, although this comes with a monthly payment, it could also mean a reduction in insurance premiums. All these costs need to be managed and included in your budget.

How you tackle this big decision-making process will determine the overall experience of buying and owning your very first set of wheels
– – LEBOGANG GAOAKETSE, WESBANK HEAD OF MARKETING AND COMMUNICATION

If a pre-owned car in good condition is what you decide on, WesBank offers the following advice:

Firstly, check the service history of the car. Pre-owned cars should have a full-service history (FSH) that will inform you whether the previous owner took the car to a licensed service centre, whether the car was serviced timeously and if the FSH does indeed reflect the real condition of the car. A car without a recorded service history may come at a reduced cost, and seem like a great deal, but can be risky in the long run.
Secondly, the Vehicle Identity Number (VIN) serves as the fingerprint of the car. The VIN found on the license disc must match the one on the car (usually stamped where the windscreen meets the dashboard). It’s a lengthy number but inspect it carefully and, and if anything doesn’t match, enquire with the dealer as to why. Even more advisable is to walk away.
Thirdly, it is important to find out if the car has been involved in a major accident. The effects of a major accident could result in mechanical damage to the vehicle that could present costly problems down the line. WesBank recommends that you ask someone knowledgeable, such as a trusted mechanic, to inspect your chosen vehicle before you sign for it on the dotted line.
Fourthly, a test drive is the only way to get a solid impression of a car’s driving dynamics, features and comfort levels. Don’t just drive around the block: take the time to check the comfort and size of the car and how it handles on a variety of roads. Listen carefully for any strange noises and if anything doesn’t seem right ask the salesperson if they would be willing to investigate and repair any issues. If you’re unhappy with anything, make it known and feel free to move on if you’re uncomfortable. Test drives do not come with any commitment to purchase. Finally, don’t feel pressured or obligated to buy the car the same day – take time to think it over.

“Nothing beats the smell of a new car, except perhaps the smell of a perfectly valeted pre-owned car that fits your budget more comfortably. Ultimately, the choice is yours. Either way, take your time, do your homework thoroughly and ask as many questions as possible. How you tackle this big decision-making process will determine the overall experience of buying and owning your very first set of wheels,” says Gaoaketse.

New Car Sales Establishing New Roots

vuyi on October 7, 2020

New vehicle sales continued to establish firmer ground, recording the third consecutive month of growth since lockdown.

The slow resurgence of sales comes off the back of reduced lockdown level regulations as the country entered Level One during September. Year-on-year results for the past three months have shifted from 29,6% in July, through 26,3% in August, to a market down 23,9% in September. According to the National Association of Automobile Manufacturers of South Africa (Naamsa), 37,403 new vehicles were sold during September, up 3,888 units from August.

“Some momentum is gathering as economic stimuli slowly return,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance. “The month-on-month increase in sales is more reassuring in real terms than the gradual improvement in year-on-year performance over the past three months. There are clear signs of recovery, although there remains a long road to full recovery.”

In contrast to actual sales activity, WesBank Vehicle and Asset Finance data indicates an increase in applications compared to September last year

As much as those nearly 4,000 additional units of volume will have been welcomed by dealers and brands, the harsh reality remains a market 11,737 units less than September last year. “Relatively, September sales down 23,9% compare favourably to the year-to-date performance, which is now 33,4% down from the same period last year,” says Gaoaketse. “That’s a very sobering 132,878 units less so far this year than pre Covid-19 levels of market activity.”

In contrast to actual sales activity, WesBank Vehicle and Asset Finance data indicates an increase in applications compared to September last year. “Whether it remains pent-up demand or merely more consumer and business optimism in the market, there are reassuring levels of demand,” says Gaoaketse. “While this isn’t currently translating into sales, it bodes well for the continued recovery of the market as affordability slowly improves.”

WesBank Vehicle and Asset Finance has also experienced an increase in its average deal duration, indicating the knock-on effects of lockdown delaying purchase decisions, as well as the continued stress on household incomes that is translating into current market performance.

Passenger car sales took the largest knock in September and accounted for the majority of the volume decrease year-on-year

Passenger car sales took the largest knock in September and accounted for the majority of the volume decrease year-on-year. At 31,2% down compared to September last year, the 22,798 sales meant 10,322 fewer passenger cars were sold in September than a year ago.

By comparison, Light Commercial Vehicle (LCV) sales were relatively buoyant at 12,267 units, down 8,9% or 1,202 sales compared to September 2019. Both segments did, however, sell more units than in August.

“Seemingly the long road to recovery for the automotive industry has begun,” says Gaoaketse. “Stimulating conditions to accelerate the return of new vehicle sales is welcome, including aggressive marketing campaigns, but – in particular – the low interest rate environment. Just how long these conditions will remain, will play an important part in how quickly the industry recovers.”

This could be the right time to buy your first car

vuyi on September 30, 2020

Any vehicle purchase should be guided by doing your homework thoroughly to reach an informed decision.
– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank

If you are scanning the latest car models online, and dreaming of owning your first set of wheels, right now could be a good time to buy that car. For many young professionals who have recently entered the job market, buying a car is probably one of the first big ticket items on the road to independence and adulthood.

While the responsibility of buying and maintaining a car may be a daunting prospect, the current favourable low interest rates and some great deals on offer in both the new and used car markets, are both compelling reasons to purchase a car.

“Any vehicle purchase should be guided by doing your homework thoroughly to reach an informed decision. Whilst buying a new car is an exciting experience, it is also one of the most significant decisions to consider in your monthly budget,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank.

“Following the extended lockdown period, there are now some very enticing offers being made to encourage the purchase of new and used vehicles. In addition, potential car owners have access to some of the most affordable debt, thanks to the exceptionally low interest rates. If a vehicle purchase is on your radar, right now is an opportune time to consider it.”

For us, it is important that graduates and young professionals fully understand the car buying process
– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

Whatever your dream car, when it comes to the actual purchase – you need to remain grounded and realistic. Factors such as affordability and what finance deal will get approved, the lack of a credit history for many young professionals can be a stumbling block on the path to vehicle finance. To overcome this, WesBank has put a special vehicle finance deal in place, where a credit history is not essential. The application process to check affordability and get approval for a vehicle finance deal can all be done online, and is quick, easy and instantaneous.

“For us, it is important that graduates and young professionals fully understand the car buying process. When they apply for finance with WesBank, they are assessed on a different set of criteria to check affordability. This means that the finance packages we offer are exclusively structured for them to ensure the delight in owning a car is not hampered by the responsibility of it becoming a financial burden. As a responsible lender, we will only approve a finance deal that is affordable,” says Gaoaketse.

Owning a vehicle is also much more than the monthly instalment. Remember that extra costs for consideration include comprehensive vehicle insurance, fuel, maintenance and repairs, which can all impact monthly budgets and cash flow. Buying a car is also a long-term commitment, so it’s important to understand the economics involved over an extended period of time.

It is our responsibility to ensure that young professionals are equipped and knowledgeable when it comes to budgeting for their first long-term commitment purchase
– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

The following tips from WesBank will help you become financially savvy when navigating the decision-making and car buying process:

Track your income and expenses – draw up a budget of all your monthly expenses and make sure you have more than you spend to determine exactly how much you can afford to spend on a car.
Spend less than you make every month – this sounds obvious, but if you don’t track your spending, you can overspend on your budget resulting in debt that may be difficult to overcome.
Spend less on wants than needs – peer pressure can result in going out and socialising or buying the latest fashion items, when that money could be better spent saving towards bigger purchases such as a car, a financial investment or even owning a house. Be careful not to make spontaneous spending and expensive purchases a habit – once in a while is fine, budget permitting of course!
Start saving early and regularly – you are never too young to open a savings account. Being disciplined about saving is an important lifelong financial lesson that should become a habit.

“It is our responsibility to ensure that young professionals are equipped and knowledgeable when it comes to budgeting for their first long-term commitment purchase. In our experience, the best purchasing decisions are always made when you have all the facts at your fingertips, and you are well informed. Now that you have the lowdown on what is required and you are ready to make the financial commitment, the best time to consider buying that car is right now,” says Gaoaketse.