Motor Insurance Industry Set for Good Year

Car sales in South Africa increased this month This should see revenue increase in car insurance groups.

The sale of new cars increased across the board in South Africa last month, leading motor insurance groups to predict a significant increase in revenues as a result.

The latest figures released by the National Association of Automobile Manufacturers of South Africa showed that the sale of passenger vehicles climbed in South Africa a very impressive 36% in April 2010, compared to the same time period exactly a year ago.

In numbers, this showed an increase from 26,283 to 35,763 new cars in one month.

"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," said Christelle Fourie, the Managing Director of executive home and motor insurance group, MUA.

So what does that mean for motor insurance groups?

With the increase in the sale of cars, the insurance industry believes that it is in for a strong year.

"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," said Fourie.

There was no particular make or brand showed a stronger increase in sales over another.

Luxury cars such as BMW and Mercedes saw growth of between 35% and 59%, while the mid range models such as VW showed a 40% increase.