Vehicle sales in steady decline in spite of below-inflation rises
CAPE TOWN – Vehicle sales continued to decline steadily in the third quarter, in spite of new vehicle price increases staying under inflation for two years.
The TransUnion Vehicle Pricing Index (VPI) released yesterday showed used vehicle price increases had also slowed.
The number of new vehicles financed in the third quarter fell 7 percent over the same period a year ago, while the number of used vehicles financed increased by 1 percent.
The new vehicle VPI moved to 3.3 percent in the third quarter from 3.1 percent in the second quarter. The used vehicle index moved to 1.1 percent from 1 percent. The VPI measures the relationship between the increase in vehicle pricing for new and used vehicles from a basket of passenger vehicles.
TransUnion Africa Auto Information Solutions head Kriben Reddy said the sluggish market reflected low consumer and business confidence and weak domestic demand. Although interest rates fell by 25 basis points in July, many consumers opted to delay vehicle purchasing decisions due to economic uncertainty, he said.
This would inevitably have a negative effect on the local automotive industry, he said. The industry contributes 6.8 percent to gross domestic product. “The bad news is that local market conditions are not likely to change in the foreseeable future. The industry is trending in a downward direction, and unless certain structural changes take place in the economy, the picture is not going to change for the local car industry,” Reddy said.
This was partially offset by a strong export market. In 2018, vehicle and automotive component exports reached a record R178.8 billion, or 14.3 percent of total exports.