Data by vehicle finance firm, WesBank, shows how much the average South African is willing to pay for a new and used car.
WesBank noted that despite a slump in new vehicle sales, those consumers who are buying vehicles are spending more, in line with new car price inflation as well as increasing demand in the used market.
The average deal value for a new vehicle grew to R291,000 this past month – an increase of 11%, year-on-year.
The average deal for used cars rose 10%, to R188,000, Wesbank said.
WesBank’s internal data showed a decline in vehicle loan applications. During June application volumes for new vehicle loans fell 19.2%, year-on-year. In contrast, demand for pre-owned vehicles weakened slightly by 0.2%.
The application volumes for new vehicles amounted to 34,835 in June, down from 38,343 in May, while for used vehicles, the number in June was 86,926, from 89,390 the previous month.
WesBank pointed out that new vehicle industry sales continued its decline in June. Aggregated sales data from the National Association of Automobile Manufacturers of South Africa (Naamsa) showed that industry sales were down 10.6%, year-on-year, with 44,939 new vehicles sold – 5,311 fewer than the same period in 2015.
Total industry sales are down 9.9%, year-to-date. This comprises respective declines of 10.4% and 8.9% for the passenger car and Light Commercial Vehicle (LCV) segments.
Passenger car sales through the dealer channel, where consumers are most active, plummeted 17.8% – correlating strongly with the decline in applications for new vehicle finance.
“This decline is indicative of new car price inflation and pressure on consumer budgets, which has resulted in a migration to the used market. Despite this, Light Commercial Vehicle (LCV) sales through the dealer channel rose 4.8% on the back of highly anticipated new model arrivals, including the new Toyota Hilux and Ford Ranger,” Wesbank said.
The rental channel also saw a surge in demand, in June. Vehicle sales to rental companies were up 43.7%, year-on-year. That contributes to the 47.7% growth for this channel, year-to-date.
“This sales performance is in line with our forecast for the year, and it’s been informed by a number of macroeconomic factors. The Rand has struggled, interest rates have been hiked and inflation has taken its toll on household budgets,” said Simphiwe Nghona, CEO of WesBank Motor Retail.
“As new vehicle sales continue to decline it will start drawing more attention to affordability and factors that affect consumers’ budgets,” said Nghona.
“Fuel prices increases, interest rates hikes and rising inflation will continue eating into disposable income. Those with high levels of debt may soon find themselves in financial trouble. More prudent consumers will also be affected, and may have to scale back their dreams of buying a new car.”