Roy Cokayne
NEW CAR inflation surged to 7.82 percent in the third quarter of this year, a level last seen at the height of the global financial crisis in 2009.
The latest TransUnion vehicle price index also revealed that new car inflation has now outpaced consumer price index (CPI) inflation for the fourth consecutive quarter.
New car prices increased by 5.6 percent in the fourth quarter of last year, by 6.58 percent in the first quarter of this year and 7.01 percent in the second quarter.
The increase in new car prices has breathed new life into the used car market.
After experiencing five consecutive quarters of year-on-year price deflation up to the fourth quarter of last year, used car inflation has now experienced three successive quarters of positive growth.
Used car inflation rose to 1.5 percent in the third quarter of this year after experiencing growth of 0.82 percent in the first quarter and 0.58 percent in the second quarter.
Keith Dye, the chief executive of TransUnion Auto Information Solutions, said yesterday that subject to the rand remaining stable, vehicle price inflation had probably peaked. “The rate of increase in new car price inflation slowed in the last two months after rising consistently for 13 months to reach a high of 7.97 percent in July.”
Dye added that the new vehicle market could probably not take any more increases at this time unless forced on it by the currency.
Johan van Zyl, the president and chief executive of Toyota South Africa, admitted last month that the company could not pass on all the increased costs to the market caused by the depreciation of the rand because it was concerned it would “just kill off the market and don’t want to do that”.
“So we are slowly, step by step, recovering the exchange rate impact,” he said. Van Zyl said the rand had depreciated since September last year by 38 percent against the dollar and euro, but Toyota SA had recovered only “a little bit” to date through pricing.
Dye warned that if new car price inflation continued to slow, the current swing back in favour of used cars could slow or reverse.
TransUnion’s records of financial registrations revealed the trend towards the purchasing of used rather than new vehicles, which emerged in the first quarter of this year, continued into the third quarter.
The ratio of used to new vehicles sold was at 1.8 to 1 in the third quarter, which was an increase on the 1.67 in the second quarter, 1.53 in the first quarter and 1.25 at the end of last year.
Dye believed demand for new and used vehicles would probably remain muted for the foreseeable future because of the continuing pressure on consumers from rising costs.
Driven by near record sales to the vehicle rental industry, which accounted for 23.5 percent of all new cars sold last month, total vehicle sales rose by 11.5 percent to 60 854 units from the 54 571 units sold in September last year.
New car sales grew last month by 7.5 percent to 42 918 units from the 39 921 units sold in September last year.
However, analysts, economists and the National Association of Automobile Manufacturers of SA are still forecasting year-on-year decline in single digits in new vehicle sales for this year.