Overall, the South African car market faced another challenging quarter – although ended 2018 with a positive outlook.
This is according to Credit bureau TransUnion’s latest Vehicle Pricing Index (VPI) which 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.
The group said that it was expecting new vehicle sales to have a challenging 2019 with flat to marginal growth.
However, it noted that the used car market could potentially have more growth if quality used stock is available in 2019.
“There are only so many levers manufacturers can use to stimulate market demand, including pricing, marketing incentives, trade-in assistance and tools such as residual value that can ease the pressure on consumers’ cash flow,” said Kriben Reddy, head of Auto Information Solutions at TransUnion.
“However, measures such as residual value can add up over time and push consumers out of the buying cycle.
“At a dealer level, there are indications that the market is swinging toward used vehicles, which tend to have a larger margin than new vehicle sales. After-sales service is also a potential growth area for dealers and can ease the pressure from lower sales while the market recovers.”
According to TransUnion’s data, there has been a shift in the vehicles financed under R200,000 in 2018 as vehicles financed over R300,000 have been on average 5% higher in 2018 vs 2017.
Notably, the report found that second-hand cars are still much more popular in South Africa compared to new vehicles.
“The ratio indicates the finance houses are financing 2.03 used vehicles for every 1 new vehicle,” TransUnion said.
“This follows the trend of the VPI where the new car prices have slowed down over the last year.”