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2013-08-01 18:13

USED-CAR MARKET UP TOO: Rising new-car prices have not dented sales - but they are doing a power of good for used-vehicle transactions. Image: Toyota

JOHANNESBURG - The South African automotive industry recorded excellent new vehicle sales in July, showing an overall 7.5% increase year-on-year.

Finance house WesBank reports that the growth was significantly boosted by the rental market, which showed growth of 24% compared to July 2012.

Passenger vehicle sales remained positive, with sales growth of 6.4% year-on-year, and LCV’s outperformed the general vehicle market with growth of 9.2% year-on-year.


Cyril Zhungu, general manager of the Motor Division at WesBank, said buyer demand remained very positive. “This is backed by WesBank’s book data. July 2013 recorded the second-highest month with 116 500 (finance) applications received. This represents year-on-year growth of nine percent over July 2012.”

He added, however, that finance contract periods had increased slightly from 68 to 69 months on both new and used cars.  “In addition, we have observed an increase in the demand for balloon payments, which has increased by 19% from January 2013 to July 2013. This indicates that consumers are using the structure of the finance agreement in order to maintain the affordability of the monthly repayments.

“In addition, we observe the average transaction value on new cars continuing to increase, recording an 11% rise over the previous year. This is in line with the Transunion Auto CPI Index, which indicates that new car prices have increased in line with the rand depreciation against the dollar, which has influenced the adjustment on new car prices.

“The price inflation on used cars is negative, which is expected to support demand for used cars.”


The price gap between new and used cars is resulting in the Used:New ratio moving in favour of used vehicles, showing a figure of 1.23:1 in July 2013.

The ratio increase was, however, being offset by aggressive marketing by manufacturers providing very attractive offers on new cars, which includes trade-in assistance, cash-back offers and discounts.

 “WesBank foresees the market remaining positive for the remainder of 2013 year, with a slight increase in activity in the used-car market. We believe the biggest factor in the foreseeable future will be the effect of a depreciating rand and the ability of the manufacturers to maintain marketing activity to support vehicle sales.”


Read more on:    good news  |  vehicle sales

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