New car prices rose just 1.8 percent year on year in the third quarter, the lowest increase for five years, according to the latest TransUnion Auto Information Solutions vehicle pricing index.
However, it appears that the vehicle price inflation honeymoon will soon be a thing of the past because of the recent weakness of the rand.
Mike von Höne, the chief executive of TransUnion Auto, warned that should recent rand weakness persist, the declining trend in new car price inflation could reverse in the fourth quarter of this year or early next year.
“This could put further pressure on new passenger vehicle sales that have been slowing this year. Current industry expectations are that the increase in the number of new passenger vehicles sold is unlikely to top 10 percent for the remainder of 2011 - down from highs of over 25 percent earlier this year,” he said.
Tony Twine, a motor industry analyst and director of Econometrix, agreed, stating that at current exchange rate levels, vehicle prices were likely to start rising from the first quarter of next year.