WesBank highlights key trends affecting the South African automotive sector at start of 2023 Festival of Motoring
The sixth Festival of Motoring, powered by WesBank, kicked off this week with the customary Media Day, where local automotive journalists were given an insider’s perspective of the Festival and the automotive industry in general.
Image supplied by WesBank
As a key theme during his keynote address, Ghana Msibi, WesBank CEO, highlighted several significant trends that are shaping the sector and will continue to dictate the evolution of the automotive industry in South Africa.
Key among these is the cost of new vehicle ownership, which, according to WesBank’s data, has sharply increased in the years between 2012 and 2023, with the highest annual spike being an increase of over 21%, experienced between 2021 and 2022.
“The less than favourable Rand/Dollar exchange rate exchange has not aided in lifting the affordability burden for South Africans,”
said Msibi.
“One needs only to look at new vehicle prices to see the devastating impact of the weak Rand. The average deal size on WesBank’s books for internal combustion engine (ICE) cars, for instance, has risen to over R300 000, while the average price of new energy vehicles (NEVs) is between R800 000 and R900 000.”
Msibi emphasised the urgent need to introduce more affordable electric vehicles (EVs) for domestic sale to close the price disparity that exists between ICE cars and EVs.
“We can’t wait for a change in Government policy to ensure the survival of the automotive sector. There is an opportunity to stimulate demand for EVs through the introduction of more affordable models, which is critical to ensure the longevity of the sector.
“The picture is not completely bleak, though,”
he stated.
“There are some green shoots, including the latest consumer price index (CPI) data, which has dropped to 4.7%, the lowest level we’ve seen in a very long time. This brings us very close to a more desirable midpoint, which we anticipate will be sustained for the better part of the coming year as well.”
Another positive trend highlighted by Msibi is the changing profile of car buyers in South Africa, which is led by exponential growth in the number of young people entering the market.
“Despite the notion that fewer young people are interested in owning a car, there has been an enormous increase in the number of millennials who are applying for car finance through WesBank. This number has increased by a whopping 700% between 2017 and 2021."
“But while they are eager to buy, this cohort of customers is very particular in their desired ownership experience. Personalisation, choice, and simplification are among their top requirements."
“It cannot be business as usual when selling to these new buyers,”
Msibi pointed out.
“That is why WesBank is evolving to become more than just a vehicle finance house and more of a mobility solutions partner to our clients. One of the ways we are doing this is though greater collaboration with WesBank’s sister companies FNB and MotoVantage to offer an integrated solution through products like eBucks, which our customers will soon be able to use to purchase, among other things, tyres and other vehicle accessories."
“It is clear that the global automotive landscape is changing, and we need to acknowledge that this is affecting what customers want in their motoring journey. If we are only now planning to deal with the changing customer dynamics, we are effectively already behind the curve."
“To maintain the vibrance of the local industry and continue to fuel the excitement that is evidenced at events like the Festival of Motoring, concerted effort is required from all players. And the time for such efforts is now,”
Msibi concluded.
