Roy Cokayne

Prices of South African used passenger vehicles went backwards for the first time in three years in the last quarter of last year, according to the latest vehicle pricing index from TransUnion Auto.

Used car prices dropped by 0.1 percent in the fourth quarter of last year after increasing by 3.6 percent in the first quarter, 2.9 percent in the second quarter and 2.3 percent in the third quarter.

Overall in the 2012 calendar year, used car prices increased by 2.2 percent, which was more than 1 percentage point lower than the growth in the previous 12-month period.

Following the global financial crisis and subsequent economic recession, used car prices experienced five consecutive deflationary quarters from the fourth quarter of 2008 and all four quarters in 2009, resulting in used car prices declining by 0.8 percent in the 2009 calendar year.

Mike von Höne, a senior vice-president at TransUnion, said yesterday the rate of depreciation of used vehicles increased slightly towards the end of last year, which often happened in the last few months of the year because dealers bought used vehicles more cautiously in this period.

This relates to the fact that all vehicles, irrespective of their date of first registration, have their birthdays on January 1 each year and results in their value being adjusted downwards.

Von Höne said that TransUnion was not “creating any alarm bells” about used vehicle prices and believed their inflation would move sideways and remain at between zero to 2 percent positive.

He stressed that TransUnion was not expecting to see several quarters of used car price deflation as had happened in 2009.

In contrast to used car price inflation, TransUnion revealed that year-on-year new vehicle inflation remained relatively steady at 2.2 percent for last year, which was marginally lower than the 2.72 percent reported at the end of 2011.

However, he said several manufacturers had already introduced, or would be introducing, annual price increases on new vehicles this month.

Von Höne warned that should the exchange rate of the rand remain weak, there could be further inflationary pressure on new vehicle prices as the year progressed.

Retail Motor Industry Organisation (RMI) chief executive Jeff Osborne warned earlier this week that the rand’s depreciation was likely to result in an inevitable increase in vehicle prices this year after about four years of price adjustments below inflation.

Von Höne attributed the continued pressure on the used vehicle market to ongoing new vehicle discounts and assistance programmes.

This was particularly evident in the segments for one- to three-year-old vehicles because these models competed more directly with new and demo models, he said.

“This trend is expected to continue for the foreseeable future as both dealers and manufacturers compete to ensure the new products are attractive to consumers,” he said.

However, Von Höne said that new vehicle price increases always led to increased support for used car prices because it widened the price gap between new and used vehicles and consumers made choices based on this.