Johannesburg - According to the head of TransUnion Auto, Kriben Reddy, South Africa's Vehicle Pricing Index (VPI) remains below inflation rates for fifth consecutive quarter. But, while new car sales were up, record high fuel prices and a higher VAT rate saw consumers delaying purchasing decisions in the used car segment, which affects the entire market negatively.
"Overall, the South African car market has had a challenging quarter," Reddy says. "In real terms, cars are cheaper than they’ve been in over a year. But this has not been enough to offset the impact on consumers when it comes to fuel price hikes of around 20% this year alone, ongoing rand weakness and the prospect of higher interest rates.”
According to TransUnion, the VPI for new and used vehicles dropped significantly in Q3 2018, down to 2.3% and 2.1% from 3.1% and 3.6% in the same period last year. Although new finance deals increased by 7% in the quarter, this was offset by a 9% decrease in used car finance deals, seeing an overall drop of 4% in the volume of passenger vehicles financed year-on-year.
However, it’s not all doom and gloom, says Reddy. While industry body NAAMSA’s figures show new passenger vehicle sales down 0.3% in 2018, and light commercial vehicles down 2.4%, vehicle exports hit a record high last month, giving the local auto industry a much-needed boost.
Another encouraging sign was the new vehicle pricing index being ahead of the used vehicle index for the second consecutive quarter.