New car dealers expect poor Christmas sales

Tamlyn Stewart

Tamlyn Stewart

It's going to be a quiet Christmas on the showroom floor this year, as new vehicle dealers' business confidence levels flatlined in the fourth quarter, to their lowest levels in 23 years.

The Rand Merchant Bank/Bureau for Economic Research Business Confidence Index recorded that new vehicle dealers' confidence levels dropped from 15 index points in the third quarter, to zero in the fourth.

That means that not a single dealer surveyed considers current business conditions to be satisfactory.

"It is an indication that dealer margins must be under stress," said RMB chief economist Rudolf Gouws.

Overall business confidence is at its lowest levels since 2001 but remained steady in the fourth quarter. A level of 33 index points was recorded, compared to 34 in the third quarter. That means that only a third of respondents rated current business conditions as satisfactory.

Analysts said that the global slowdown exacerbated the domestic downswing, as earlier interest rate hikes and higher inflation impacted on the real economy.

However, the falling prices of imported goods and interest rate cuts on the horizon should give some support to business confidence.