File picture: Ilya Naymushin / Reuters.
Johannesburg - A sharp relative decline in used vehicle values, particularly in the luxury segment, is creating pressure for consumers who wish to trade in and recycle their vehicles every three to four years.

Combined Motor Holdings (CMH) chief executive Jebb McIntosh said on Wednesday that this downward adjustment in values was a consequence of negative new vehicle pricing growth over the past two to three years.

McIntosh added that the longer periods over which vehicles were financed, coupled with the fall in their residual values, had led to a greater gap between the resale values and the finance settlement values.

He said the car hire market had also been forced to retain its vehicles for longer periods and rent them out at a lower daily rate, because the fall in used vehicle values had made the retired fleet less saleable.

McIntosh said the national new vehicle market had perpetuated the sideways cycle that had been in place for the past two to three years, with sales levels sustained by a negative movement in real new car prices and robust sales incentives.

He said the sideways cycle in national new car sales was not surprising, given the particularly difficult economic circumstances.

The group achieved a 5 percent increase in new vehicle sales against the backdrop of flat national new vehicle sales. The rise in the group’s luxury model sales was particularly pleasing, because this was a segment that had suffered declining trends over the past three years, he said.

Business Report