JOHANNESBURG - The South African car market was only shored up by exports, which grew 17percent to 260847 units as local sales remained depressed in the fourth quarter of 2019.
According to the latest TransUnion SA Vehicle Pricing Index (VPI) released yesterday, the two-year slump will continue for the foreseeable future, with a challenging macro-economic outlook driving down vehicle sales, despite fuel price decreases and an interest rate cut.
“We need to see sustained positive economic growth to get the new car market moving, and the challenge is that in 2019 we weren’t there. The problem is, it is unlikely that this situation will change in the short term, indicating that we may continue to battle for some years yet,” said Kriben Reddy, the head of Auto Information Solutions for TransUnion Africa.
The saving grace is that the export sector is expected to experience further growth in 2020.
The VPI indicated that in the fourth quarter, new vehicle price increases remained below inflation for more than two years now. Despite this, the number of new vehicles financed in the fourth quarter (Q4) - a key indicator of sales - fell
1.6percent compared to the same period a year ago, although the number of used vehicles financed showed a 1.4percent increase. The VPI for new vehicle pricing slowed to 2.9percent in Q4 from 3.3percent in the previous quarter with the used vehicle index moving to 1.2percent from 1.1percent.
Reddy said the stagnant market reflected ongoing low consumer and business confidence, with continuing load shedding and pending decisions on South Africa’s investment rating having a clear impact on both growth prospects and market sentiment.