The most popular new and used car brands in South Africa right now

While TransUnion’s recent Vehicle Price Index (VPI) reports indicate a growing preference among consumers for affordable, reliable and reasonably young used cars, the trends recorded in the latest VPI suggest an about-turn that may see new car purchases regaining some of their lost popularity.

The VPI is a quarterly report compiled by the credit bureau 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.

Between Q3 2016 and Q3 2017, prices on 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, TransUnion said.

 

The index therefore shows that consumers have endured new price increases at a rate below CPI for first time since 2013 – showing an ongoing demand shift to used vehicles. However, TransUnion said that the supply of quality used vehicles is diminishing as the demand increases which is supported by increasing prices of used vehicles.

“Used cars have been performing well for the last few years, and as a result, fewer people have been opting for new vehicles,” said Derick de Vries, CEO of Auto Information Solutions at TransUnion.

“Fewer new vehicle purchases mean fewer vehicles to resell to dealers, a dwindling availability of quality used cars, and that dealers can thus charge more for them. In other words, new car sales are what inevitably feed the used car industry, and so, the performance of the two are inextricably linked by the rules of supply and demand,” he said.

According to TransUnion’s analysis, manufacturers have slowed down the price increases in an attempt to help dealers sell more new vehicles. Consumers can take advantage of the marketing incentives which include preferential interest rates, trade assistance and manufacturer discounts as well as the slowing down of price increases.

Despite enduring tough times of late, the overall outlook for both the new and used vehicle markets looks tentatively positive, the group said. Total financial agreement volumes in the passenger market have increased from 2017 Q2 to 2017 Q3 by 9%. New passenger finance deals has increased by 8% and used has increased by 9%.

Average car loan

Used vehicle prices have been over 3% in the last 4 quarters which indicates the demand for used vehicles trend will continue at least till the end of the year, TransUnion said.

The used-to-new ratio is based on finance deals registered in the last quarter. The ratio indicates the finance houses are financing 2.45 used vehicles for every 1 new vehicle. This follows the trend of the VPI where the used car price increases has remained over 3%, it said.

“The shift (back to new cars) will certainly come, 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,” it said.

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.

The used car price increase has been higher than new price increases for the first time since 2012 Q3.

The best-selling new and used car brands

Toyota and VW has been doing well in both areas sharing the top 2 spots in both new and used and have captured more than 40% of the used passenger financed volumes. Renault has had a good quarter in the new passenger market and BMW in the used.


Read: 10 worst-selling passenger cars in SA right now

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The most popular new and used car brands in South Africa right now