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South Africans ditch new cars for used models priced under R200,000

South Africans ditch new cars for used models priced under R200,000

TransUnion warns that manufacturers may be forced to hike new vehicle prices following the recent downgrades by ratings agencies Fitch and S&P Global.

It said that while the downgrades have not affected prices yet, a looming recession could put pressure on manufacturers who would be forced to pass on the hikes to consumers which will result in a contraction of vehicle sales, as more than 70% of vehicles are imported and subject to currency volatility.

“Should the rand depreciate to R16-R17 against the dollar, this will have an extremely negative effect on vehicle index for new cars,” TransUnion said.

“With the recent ratings downgrade to junk status we are expecting to see lower access to credit, a weakening currency, rising inflation and even higher interest rates. Consumers will have even less disposable income which will force individuals to hold onto their vehicles for longer instead of replacing them,” said Derick de Vries, CEO, Auto Information Solutions at TransUnion.

Read: How much money we spend when buying a new car in South Africa

For now however, the TransUnion SA Vehicle Pricing Index (VPI) shows an increase in pricing for new vehicles to 8.8% in Q1 of 2017, up from 6.6% in Q1 2016, while used vehicles prices have risen from 2.2% in Q1 2016 to 3.7% in Q1 2017.

A slight surge is evident in vehicle sales in this quarter and, according to National Association of Automobile Manufacturers South Africa (NAAMSA), there has been a yearly increase of 2.1% in passenger vehicles.

TransUnion noted that new passenger finance deals have increased by 27%. However, for every new vehicle, 2.49 used vehicles are financed.

Volkswagen and Toyota have captured more than 50% of the new car market, and lead the used car market as well, although there is not much difference separating the top tier from Ford, Hyundai and Mercedes-Benz, it said.

Notably, Hyundai is a popular choice in the used passenger segment, making up more than 9% of the market, while making up less than 3% of the new segment.

According to de Vries, overall, more vehicles from all sectors are being financed below R200,000 when compared to Q1 2016 and Q1 2017.

  • Sum of <R200,000 – 52%
  • Sum of R200,000 – R300,000 – 25%
  • Sum of >R300,000 – 23%

“This consumer shift opens up new possibilities for the industry in terms of used vehicles and it is worth noting that 40% of all used vehicles that were financed in this quarter were less than two years old. This 40% can be further broken down into 25% of vehicles that are under a year old, while 15% are under two years.

“But as the demand for used vehicles increases and supply comes under pressure this is likely to push the price up on used vehicles further and a shift back to the new car market,” de Vries said.

Read: South Africans turn to used cars, and ditch premium models for locally made ones


BusinessTech's Staff Writer is directly plugged into the South African Internet backbone, and spits out press releases and other news as they receive it. They are believed to be cl...
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  • Viper_ZA

    Yeah, we forever have to tighten the belt ey?

  • RodneyVikens

    I personally don’t see the point in getting a brand new car, even before the Rand showed us No.1’s uhm… you know what. Rather get an excellent condition second hand vehicle. For 200K you can get a pretty descent vehicle.

  • Ray Mulder

    If everyone kept their vehicles for 10 years minimum new car prices would be half what they are now…instead we have to get a new car every 24 months to keep up with the Jones’s and to satisfy the hot chick down the road…and don’t forget the old ego which no self respecting egoist would even know about…

    • Wurnman

      My wife and i drive a 2001 Tazz… still going strong and we are happy.

      • Ray Mulder

        They are still great cars, i had one too…
        Got a 2006 Ford KA and it’s got less than 100 000 on the clock and it’s great on fuel and because it’s arguably the ugliest car in the world, no one in their right mind wan’t to be seen dead having stolen one of them…lol

        • brz

          I’ve always thought the KA is quite cute.

          • Ray Mulder

            Thanks… I’ll look upon it with new eyes from now 🙂

        • DeatheCore

          Tried to fit a large suitcase into the boot of the KA once… I’m sure you can imagine how this turned out!

          • Ray Mulder

            You own a large suitcase? 🙂

    • Bzzzz


      I have two cars. One is 12 years old luxury sedan and looks like new. The other is a 7 year old SUV/4×4 and runs like a dream. My total expenses for these cars over the past 10 years including purchase price and all maintenance excluding petrol has been R380 000.

    • Runnin Bare

      20 years ago I decided to “stuff the Jones’s” after driving Mercs for 35 years. Life is good.

  • Silver King

    I got myself a VW Polo 2010 for R55 000 at a auction. Helped that every second car was a VW lol.

    I wanted another Ford Ranger, but they are costly now 🙁

  • SA First

    Recession coming thanks to Zuptas….

  • Ab Irato

    Bought a 3 year old merc recently with only 15000 kms. Still looks brand new. Saved more than 35% compared to new price. I will never buy new again. Let someone else take the big first two year depreciation.

  • Treezle

    But you still see the latest GTI’s, 3 Series and A classes being driven. A lot of people still don’t understand ‘fixed rate’ or ‘linked rate’ interest rates, and to be honest for most people driving these fancy cars, they are not fazed about repayments, unfortunately for them. I have heard horror stories where people re-finance their balloon payments. I drive a 2007 Prado. It’s got almost 200k on the clock, and to be honest I could afford a newer and better car but what is the point? Rather spend my money on furniture, or investing it for the future (I own a property instead of driving a new 3 series).

    New cars are a LUXURY, not a necessity.

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