Economic climate evident in market

IN THE DRIVER’S SEAT

Numbers say a lot about anything that is counted and the motoring industry is no exception.

Every month the National Association of Automobile Manufacturers of South Africa releases sales figures for the previous month with comparisons with the corresponding month of the previous year. Then every quarter and every year are also weighed up against the previous ones.

The myriad of figures show which segments have shown growth and which ones are in decline. This information in turn is analysed by the manufacturers in determining consumers’ demands and how much stock is

required of various models. All new cars of course.

An exact calculation of used cars changing hands are for obvious reason not that easy to determine as not all of them are financed, especially the older ones low in value. But the ones that do get financed are calculated and paint a picture of the economic climate. And you guessed right, the current one is rather bleak.

According to the latest TransUnion SA Vehicle Pricing Index for Q2 2019, the ratio of used cars sold for every new car was 2.16, up 0.11 from the corresponding quarter in 2018. That means for every new car sold in South Africa over the course of the last three months, 2.16 used cars are being sold. And as stated before, this figure should be higher if you add cash sales.

According to TransUnion, as much as 66% of pre-owned vehicles financed are older than two years “which indicates consumers are opting for older vehicles as pressure on disposable income increases”.

There is also a clear shift back to vehicles under R200 000, which stands at levels last seen in Q2 2013.

“It effectively means that consumers’ purchasing power has not changed since that time and has actually decreased in real terms (that is, taking inflation into account),” says TransUnion.

So in other words, even if an average salary earner received seven increases over the last seven years, because of higher inflation he/she can still only afford to spend the same amount per month on a car as was the case in 2013. And to give you a simple example, a new Golf 1.4 TSI Comfortline DSG was listed at R279 400 in 2013, with the similar model in 2019 selling for R394 600!

And at the other end of the spectrum, 140 BMW X5s – a range that starts at R1.2 million – and 79 Toyota Land Cruiser 200s – which start at just over one bar – were sold in July. Combined, this pair outsold the much more affordable Corolla that starts at R283 100.

What does the Bible say? The rich will get richer and the poor will get poorer.