Milder vehicle price increases, imminent interest rate cuts and pent-up market demand should result in improved domestic car sales this year, says Wesbank chief executive Ronnie Watson.

Milder vehicle price increases, imminent interest rate cuts and pent-up market demand should result in improved domestic car sales this year, says Wesbank chief executive Ronnie Watson.

Watson said on Tuesday that South Africa’s new vehicle market would receive a “small but detectable” boost in 2003.

"Despite the difficulties faced by the motor industry, I am predicting passenger vehicle sales will rise this year," he said. There were a number of factors behind this.

"We are not going to see the price increases of 18 to 20 per cent we saw last year, and that is due to the stronger currency,” quoted Watson as saying.

"There is a lot of pent-up demand from last year when we saw those increases, and I hope we will see interest rate cuts after June, to show the consumer he can enter a medium-term contract.

"Meanwhile, the ratio of debt to disposable income is at its lowest for many years in SA. And, finally, black economic empowerment is leading to a black middle class, which is stimulating demand for vehicles," Watson said.

Watson predicted that 232 500 passenger vehicles would be sold in South Africa this year, marginally more than the 231615 units sold in 2002.

"We have just got to find ways to grow this market," he said. "If anyone had told an investor he was going to be in an environment of no growth for the next three decades, where do you think he would have put his money?"

Watson suggested solutions lay in a combination of "inventive" pricing policies from manufacturers and importers, creative funding for customers by private leasing, extended payment periods, low interest packages and "large dollops of positive sentiment all round from both the public and private sectors", reported.

WesBank's market share is growing steadily and now stands at about 28 per cent of all vehicles financed in SA.