INSURANCE: Car Sales Bodes Well For Insurance
Recent Western Cape Business News
New car sales were up sharply in April, indicating that the car market is finally back on form after a tough few years. According to Christelle Fourie, Managing Director of Cape Town-based MUA, this is a good indicator that the insurance sector is set for a strong year.
“Sales of new cars bodes well not just for the motor insurance industry but also for the wider insurance sector in South Africa. Motor insurance makes up about 60% of the total personal lines business in South Africa, therefore an increase in demand for car insurance is seen as a good gauge for determining the prospects for the rest of the short-term insurance industry,” says Fourie.
Figures published this month by the National Association of Automobile Manufacturers of South Africa (NAAMSA), revealed that sales of passenger vehicles increased 36% from 26 283 in April 2009 to 35 763 in the same month this year.
“Sales of passenger vehicles in the domestic market in particular showed a significant increase, indicating that South Africans are starting to spend on big ticket items again,” says Fourie.
She says the increase in vehicle sales has also not been restricted to any particular make or market segment. In the middle market segment, brands such as Volkswagen increased sales by 40% in April to 5,389 from 3,843 in the same period a year earlier, and despite its recent woes, sales of Toyota vehicles rose 10% to 3,080 on the same period.
There have also been positive signs in the luxury car market. BMW Group recorded a 40% increase in sales to 1,877. Sales of Audi’s rose 59% in April to 319 against 200 a year earlier, sales of Mercedes-Benz rose 35% to 1,816, while sales of Toyota Lexus models doubled to 26 against 13 in 2009.
Fourie says these figures are backed up by a surge in new policies at MUA, which specializes in insuring executive, luxury and exotic vehicles. “In April alone, we recorded an approximate 20% increase in new business quotation requests, due largely to the upturn in demand for new luxury vehicles.”
Fourie says consumers are often prompted to review their insurance policies when they buy a new car, so the upturn in demand for new motor vehicles indicates an opportunity for insurers to capture new business in 2010 after a period of static policy growth.
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