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Johhanesburg - TransUnion's Vehicle Price Index (VPI) shows prices of used cars have increased in South Africa.
TransUnion said: "While TransUnion’s recent VPI reports indicated a growing preference among consumers for affordable, reliable and reasonably young used cars, the trends recorded in the latest VPI are suggestive of an about-turn that may see new car purchases regaining some of their lost popularity.
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"The surprising affordability of new cars is symptomatic of slowing sales – as manufacturers and dealers go out of their way to tempt buyers by offering discounts, preferential interest rates and trade assistance. Manufacturers have also been able to steady their prices thanks to unexpectedly low inflation and interest rates – given the country’s delicate economic condition."
Check out the infographic below:
Price increase for used cars
Between Q3 2016 and Q3 2017, prices for new vehicles increased at a slower rate than many would have anticipated, with the new vehicle VPI dropping from 9.9% to 3.1%, the lowest such percentage since 2013. In the same period, price increases on used cars increased from 2.8% to 3.6%, the highest level observed since 2012.
The previous report (Q2 2017) revealed a slow-down in the VPI increase on new vehicles, and this quarter is no different, continuing the trend toward greater affordability in the new car market.
SA Vehicle Price Index
The VPI is a quarterly report compiled by TransUnion that examines the link between the year-on-year price increases for both new and used vehicles, drawing data from a selection of South Africa’s most popular passenger vehicles from 15 top-volume manufacturers. A lower VPI indicates slower pricing increases and, therefore, greater relative affordability for the consumer.
Despite enduring tough times of late, the overall outlook for both the new and used vehicle markets looks tentatively positive. Total financial agreements have increased by 9% in the last quarter alone, showing only a marginal difference between volumes for new and used vehicles at 8% and 9% respectively. However, the trend towards used car purchases is expected to continue a little longer; likely until the end of the year or beyond.
The shift will certainly come, however, with NAAMSA recently reporting a 5.9% year-on-year increase in sales of new passenger vehicles, and 11.7% for new light commercial vehicles. TransUnion’s VPI reported that the value of financing (in both the new and used markets) has remained roughly the same since last quarter’s VPI, with 41% being financed below R200 000, and the average used car loan coming in at around R234 000.
