New data from consumer credit reporting agency TransUnion shows that it is now cheaper to buy a new car in South Africa, despite a multitude of global and local factors putting pressure on the industry and consumers.
The group’s most recent Vehicle Price Index (VPI) – which effectively measures inflation for new vehicles – shows that new vehicle prices have fallen from 8.8% in Q1 2021 to 4% in Q1 from 2022. This means that the cost of new vehicles is still below inflation, although this is expected to increase in the coming months.
By comparison, used cars continued to rise in price in the face of changing consumer supply and demand, TransUnion said, as the used car index rose from 3.7% to 7.9% over the same period.
The VPI measures the relationship between the increase in vehicle prices for new and used vehicles from a basket of passenger cars that includes 15 top manufacturers. The index is created using vehicle sales data from across the industry.
“Overall, the global auto industry had another challenging quarter – with inventory purchasing remaining a key constraint,” the group said.
“The interest rate and fuel hikes in South Africa increased the total cost of ownership. Despite supply chain disruptions, oil price volatility, lack of quality of supply used, impending rises in unemployment, negative currency effects and further pressure on disposable income during the quarter, sales returned to normal levels.”
The group’s data shows that consumers continue to value value in the used car market, with more financing deals being signed in the R300,000+ category.
“The drive for high-quality used vehicles and the limited supply is well summed up by used vehicle prices, with the trend remaining strong,” said Kriben Reddy, head of automotive information solutions at TransUnion.
“Stock-supply is still a big problem, especially now that consumers are holding onto their vehicles longer because they are increasingly difficult to replace. The interest rate and the large fuel increase in the first quarter did little to detract from new vehicle sales as consumer demand continues to lower their total cost of ownership.”
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