26
Standard Bank Vehicle and Asset Finance Sydney Soundy
| Date post: | 18-Jan-2015 |
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Standard BankVehicle and Asset Finance
Sydney Soundy
Contents
Economic Indicators
Vehicle Market Trends
Consumer Behaviour Trends
Economic Indicators
GDP Rand Value and % Growth
Source: Neal Bruton & SARB
GDP growth has been relatively subdued over the last 3 years, with expected 2013 GDP at 2.7% (SARB).
Real Gross Domestic Product of South AfricaAnnualised % Change vs Rand Value
3
-0.6
4.4
6.8
1.51.8
5.7
7.7
4.6
3.8
1.2
2.5
0.80
-0.90
0.40
3.703.20
4.403.70
2.62
1.1
3.1
4.45.24.6
3.42.62.02.2
6.25.7
6.7
4.3
7.4
5.6
2.7
6.26.7
5.86.4
3.1
5.0
6.0
3.0
4.4
1.8 1.7
3.5
4.4
3.13.6
4.44.8
1.9
3.3
1.2
2.1
-1.7
-6.3
-2.7
-8
-6
-4
-2
0
2
4
6
8
10
De
c-9
3
Se
p-9
4
Ju
n-9
5
Ma
r-9
6
De
c-9
6
Se
p-9
7
Ju
n-9
8
Ma
r-9
9
De
c-9
9
Se
p-0
0
Ju
n-0
1
Ma
r-0
2
De
c-0
2
Se
p-0
3
Ju
n-0
4
Ma
r-0
5
De
c-0
5
Se
p-0
6
Ju
n-0
7
Ma
r-0
8
De
c-0
8
Se
p-0
9
Ju
n-1
0
Ma
r-1
1
De
c-1
1
Se
p-1
2
An
nu
al %
Ch
an
ge
500000
700000
900000
1100000
1300000
1500000
1700000
1900000
2100000
R M
io
CPI and PPI
Source: Neal Bruton
CPI and PPI are experiencing upwards pressure.
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
Ind
ex
Headline Rate of Inflation
Producer Price Inflation
Historical fuel price change
Source: Department of Energy
There has been a 258% and 376% increase in petrol & diesel prices since 2001. When comparing to 2010, the prices have risen by 69% in petrol and 74% in diesel.
Household Debt as % of Disposable Income of Households
Source: Neal Bruton
The average South African is still highly indebted.
45
50
55
60
65
70
75
80
85M
ar-
90
Ma
r-9
1
Ma
r-9
2
Ma
r-9
3
Ma
r-9
4
Ma
r-9
5
Ma
r-9
6
Ma
r-9
7
Ma
r-9
8
Ma
r-9
9
Ma
r-0
0
Ma
r-0
1
Ma
r-0
2
Ma
r-0
3
Ma
r-0
4
Ma
r-0
5
Ma
r-0
6
Ma
r-0
7
Ma
r-0
8
Ma
r-0
9
Ma
r-1
0
Ma
r-1
1
Ma
r-1
2
%
Credit Extended to the Private Sector
Credit extensions are experiencing relatively flat growth over the last year.
Source: Neal Bruton
Annual Change in Credit Extended to the Private Sector
(5.00)
-
5.00
10.00
15.00
20.00
25.00
30.00Jan-9
4
Jul-94
Jan-9
5
Jul-95
Jan-9
6
Jul-96
Jan-9
7
Jul-97
Jan-9
8
Jul-98
Jan-9
9
Jul-99
Jan-0
0
Jul-00
Jan-0
1
Jul-01
Jan-0
2
Jul-02
Jan-0
3
Jul-03
Jan-0
4
Jul-04
Jan-0
5
Jul-05
Jan-0
6
Jul-06
Jan-0
7
Jul-07
Jan-0
8
Jul-08
Jan-0
9
Jul-09
Jan-1
0
Jul-10
Jan-1
1
Jul-11
Jan-1
2
Jul-12
Jan-1
3
Jul-13
%
Personal Savings Ratio (Personal Saving / Disposable Income)
Source: Neal Bruton
South African’s have had negative savings since 2005, this is not sustainable.
-4
-2
0
2
4
6
8
10
12M
ar-
85
De
c-8
5
Se
p-8
6
Jun
-87
Ma
r-8
8
De
c-8
8
Se
p-8
9
Jun
-90
Ma
r-9
1
De
c-9
1
Se
p-9
2
Jun
-93
Ma
r-9
4
De
c-9
4
Se
p-9
5
Jun
-96
Ma
r-9
7
De
c-9
7
Se
p-9
8
Jun
-99
Ma
r-0
0
De
c-0
0
Se
p-0
1
Jun
-02
Ma
r-0
3
De
c-0
3
Se
p-0
4
Jun
-05
Ma
r-0
6
De
c-0
6
Se
p-0
7
Jun
-08
Ma
r-0
9
De
c-0
9
Se
p-1
0
Jun
-11
Ma
r-1
2
% .
JSE Trend and Car Sales Cycle
Source: Neal Bruton
The JSE has shown good growth since the economic downturn, which has been supporting wealth invested in the market.
12000
17000
22000
27000
32000
37000
42000
47000
Ja
n-9
0
Ja
n-9
1
Ja
n-9
2
Ja
n-9
3
Ja
n-9
4
Ja
n-9
5
Ja
n-9
6
Ja
n-9
7
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
Ja
n-1
0
Ja
n-1
1
Ja
n-1
2
Ja
n-1
3 2000
7000
12000
17000
22000
27000
32000
37000
42000
Totpas Sales Cycle JSE All Share Index
Monthly Prime Rate
Source: Neal Bruton
Prime rate at its lowest level in history, this is contributing to increased credit extension in the market.
5.00
10.00
15.00
20.00
25.00
30.00
Ja
n-8
0
Ja
n-8
2
Ja
n-8
4
Ja
n-8
6
Ja
n-8
8
Ja
n-9
0
Ja
n-9
2
Ja
n-9
4
Ja
n-9
6
Ja
n-9
8
Ja
n-0
0
Ja
n-0
2
Ja
n-0
4
Ja
n-0
6
Ja
n-0
8
Ja
n-1
0
Ja
n-1
2
Ja
n-1
4
%
Vehicle Market Trends
Make Up of the BA900 Installment Debtors and Leases
Source: SA Reserve Bank & VAF Finance
The growth in the VAF market has been driven primarily by the Individual market. Individuals contribute 72% of the total financed installment and lease book.
0
50
100
150
200
250
300
350A
pr-0
6
Aug
-06
Dec
-06
Apr
-07
Aug
-07
Dec
-07
Apr
-08
Aug
-08
Dec
-08
Apr
-09
Aug
-09
Dec
-09
Apr
-10
Aug
-10
Dec
-10
Apr
-11
Aug
-11
Dec
-11
Apr
-12
Aug
-12
Dec
-12
The Market Individual Market Business Market
100%
72%
28%
New Passenger Car Sales Cycle
Source: Neal Bruton
Total New Passenger Car Sales Cycle1970 Onwards
10000
15000
20000
25000
30000
35000
40000
45000
500001970-0
1
Jan-7
1
Jan-7
2
Jan-7
3
Jan-7
4
Jan-7
5
Jan-7
6
Jan-7
7
Jan-7
8
Jan-7
9
Jan-8
0
Jan-8
1
Jan-8
2
Jan-8
3
Jan-8
4
Jan-8
5
Jan-8
6
Jan-8
7
Jan-8
8
Jan-8
9
Jan-9
0
Jan-9
1
Jan-9
2
Jan-9
3
Jan-9
4
Jan-9
5
Jan-9
6
Jan-9
7
Jan-9
8
Jan-9
9
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Mo
nth
ly M
ark
et
.
Market Forecast Incl Non Reps Trend Cycle Forecast Incl Non Reps
2 million new cars sold Jan 2007 to July 2012
The new passenger car cycle is almost back at levels experienced in 2006 and 2007. There are over 9,797,413 registered vehicles in South Africa in 2010 (Drive Alive), including new vehicles and dropped off
YTD 2013, this would take the figure to around 10 million cars on the road.
Factors That Will Impact Sales Growth
Contrary to the main economic indicators, the new passenger market is 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 the
market. Factors moderating growth:
– GDP growth at low levels.– Disposable income pressure from fuel prices, food prices, CPI
inflation, and number of consumers with impaired credit records.– Exchange rate pressure could see these costs transferred onto
the customer in new vehicle market through prices increases.
Consumer Behaviour Trends
Engine Size
Source: RGT Smart
Small 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
Going Green: Fuel Type Comparison
There seem to be two approaches to going green:• Attempts to maximize performance of existing technologies through performance capabilities e.g. BMW – Efficient
Dynamics, Mercedes – Blue Efficiency, VW – Blue Motion, Citroen – Airdream.• Introduce new cutting edge technologies and alternative powered engines.
Source: RGT Smart
Hybrid models have grown in the last couple of years off a very small base.
-
100
200
300
400
500
600
700
800
900
-
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
500 000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Diesel (LHS)
Petrol (LHS)
Hybrid (RHS)
Luxury Market
Source: RGT Smart
Luxury vehicles have experienced a growing sales trend, showing the resilience in this sector of the market even through the tough times.
Luxury Vehicles: R300,000 – Above Price Range
Affordability & Cash Flow Considerations – Original Term, Deposits & Residual Values
Source: VAF Standard Bank
Request for residual values have steadily increased, a drop in deposits has been experienced, whilst the term requested has also increased.
Affordability and Cash Flow Considerations – Actual Term
Source: TransUnion AIS
Actual settlements have remained relatively flat over the last couple of years.
New and Pre-Owned Market Trend
Source: TransUnion AIS
There has been a downward shift in the New / Pre-Owned ratio from 2012.
Pricing Impact in New and Pre-Owned Market
Source: TransUnion AIS
There is a widening gap between the used and new price change, with pricing in the new market remaining relatively flat. This could see a shift towards the used market becoming more favorable.
Alternatives to Car Ownership
Source: VAF Standard Bank
Rental and leasing agreements contribute a small % of the VAF Standard Bank market, although this trend is picking up in 2013.
Age Demographics
Source: TransUnion AIS
62.4% of VAF deals concluded originate from the age groups 18 to 45 years old.
End
