Cheaper used cars sell

> >Augetto Graig - The latest TransUnion South African Vehicle Pricing Index (VPI) for used vehicle prices moved from 2.1% in Q3 2018 to 1.1% in Q3 2019. Used vehicle price increases have also slowed down, which is indicative that the used market is under strain, according to the regional debt data analysts.The index measures the relationship between the increase in vehicle pricing for new and used vehicles from a basket of passenger vehicles which incorporates 15 top volume manufacturers. Vehicle sales data collated from across the South African industry was used to create the index.Consumer and business confidence remain low, reiterating weak demand conditions. Interest rates fell in July, which offered consumers some additional spending power. But consumers have still opted to delay purchasing decisions due to the economic instability, says TransUnion.In the used vehicle market, the make-up of used vehicle sales agreements has shown that 36% are under two years old, which is an improvement on 34% from 2019 Q2. Demo models made up 6% of used financed deals, which indicates consumers are opting for older vehicles as pressure on disposable income increases.According to Naamsa (National Association of Automobile Manufacturers of South Africa), there has been a year-on-year decline of 5% in the sale of new passenger vehicles for 2019 Q3, compared to 2018 Q3. The used-to-new ratio is based on finance deals registered in the last quarter, and that ratio indicates that finance houses are financing 2.26 used vehicles for every new vehicle purchased.Petrol price changes, interest rate changes, slower price increases, dealer incentives and lower inflation are not driving consumers to purchase more expensive cars. Consumers are still opting for less expensive, entry-level vehicles. Average loan size in this quarter is also similar to that of 2013 Q2, further emphasising pressure on consumers’ disposable income and the emergence of increasing demand for entry-level vehicles or older used vehicles.StagnantSigns point towards stagnant new vehicle sales going into the second half of the year as dealers push sales through guaranteed buy-back options and marketing initiatives to suit the consumer's pocket. Consumers are in a position of power when purchasing new or used vehicles with price increases well below inflation for the past two years as manufacturers try to stimulate the market.TransUnion say they have seen a shift back to vehicles priced under R200 000 as consumers continue to feel the strain on disposable income. They also find that Toyota and Volkswagen are doing well; sharing the top two spots in both new and used sales, and having captured more than 40% of the new and used passenger financed volumes. Toyota has been doing well in financed sales volumes for both new and used, and definitely seems to be the market leader in light commercial vehicles, they say. The top five light commercial vehicle manufacturers make up more than 90% of the sales in both new and used markets.AutoTrader’s most recent car industry report sheds even more light. In June they said the South African used car market is estimated to have lost more than R16bn in the previous three months, with 56% less unit sales compared to the previous year. However, their studies of automotive digital retailing in South Africa found that the 2016 Ford Ranger was the most bought second hand vehicle in South Africa during the year up to June. The 2016 Volkswagen Polo was the model of used vehicles sold the second most, with the 2013 Toyota Hilux in third. The rest of their top ten lists the 2017 Volkswagen Polo Vivo, the 2013 Mercedes-Benz C-Class, the 2013 BMW 3 Series, the 2015 Toyota Fortuner, the 2015 Ford Fiesta, the 2013 Volkswagen Golf and the 2017 Ford Ecosport in tenth.- augetto@republikein.com.na

Cheaper used cars sell

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Cheaper used cars sell

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