JOHANNESBURG - The vehicle pricing index for new cars has declined significantly to 2.3percent in the third quarter of this year from 3.1percent in the corresponding quarter of last year.
TransUnion Auto in South Africa said yesterday that new passenger car prices declined for the fifth consecutive quarter after taking into account the effect of inflation.
The group said the vehicle pricing index revealed that the increase in used vehicle prices also dropped significantly to 2.1percent in the third quarter of this year from 3.6percent in the same quarter last year.
TransUnion head Kriben Reddy said they expected the trend to continue into the next quarter with modest increases in volumes.
However, Reddy warned that the depreciation and volatility of the rand in the third quarter had impacted the input prices of manufacturers which would affect the future prices of vehicles.
“It’s a time to remain cautious and keep a close watch on both affordability levels and credit health in the current economic climate,” Reddy said.
“The combination of a weaker rand and a possible increase in interest rates could put more strain on consumers who have not worked out their total cost of ownership.”
Reddy said while new car sales were increasing, record high fuel prices and a higher VAT rate had resulted in consumers delaying purchasing decisions in the used car segment, which affected the entire market negatively.
He said that overall the South African car market had a challenging third quarter with the 7percent increase in new finance deals in the third quarter offset by a 9percent decrease in used car finance deals.
Reddy said an encouraging sign for the industry was that the new vehicle pricing index was ahead of the used vehicle index for the second consecutive quarter.
He said in line with TransUnion forecasts, the used-to-new ratio decreased to 2.08 used vehicles for every new vehicle financed from 2.45 used vehicles in last year’s third quarter.
Reddy said 41percent of used vehicles sold in the quarter were under two years old and 10percent were demonstration models, which indicated that consumers were opting for newer models where possible.
Reddy added that the percentage of new and used cars that were being financed below R200000 had declined to 36percent, its lowest level since the first quarter of 2013.