Vehicles become more affordable
NEW AND used car price inflation slowed in the third quarter to its lowest level this year, vehicle risk intelligence company TransUnion Auto Information Solutions said yesterday.
TransUnion said that its latest vehicle pricing index for the third quarter showed inflation touched 2.3 percent for new cars and 2.1 percent for used cars.
The strength of the new car market this year has been partly attributed by motor industry analysts to improved vehicle affordability caused by low new vehicle price inflation, which has resulted in a real reduction in prices after taking inflation into account.
The improved affordability of new cars has also drawn prospective used car consumers into the new vehicle market, which in turn has helped to depress used car prices and trade-in values.
Mike von Höne, the chief executive of TransUnion, said that both the new and used car markets remained relatively strong, with the used car market experiencing positive sales growth of 4.1 percent for the quarter.
Von Höne added that the National Association of Automobile Manufacturers of SA (Naamsa) sales statistics showed that new passenger vehicle sales increased by 12.5 percent year on year in August and TransUnion Auto expected this doubledigit trend to continue for the remainder of this year.
Von Höne said that the lower growth in the used car market had led to a further narrowing of the sales ratio between new and used cars to 1.63 used cars for every new car financed in August, from 1.88 used cars for every new car sold in May this year.
Von Höne said: “Interestingly, around 80 percent of all new and used cars financed are priced at less than R200 000. When one considers that only 15.5 percent of all new cars fall within this price bracket and 66.5 percent cost more than R300 000, it’s clear consumers remain extremely price sensitive.”
He added that this appeared to be affecting dealers, who were buying and retailing further below the TransUnion Auto Dealers’ Guide values.
TransUnion’s vehicle price index measures the year-on-year price inflation of a market-weighted basket of new and used vehicles.
The index is calculated from data received by TransUnion on vehicle financing registrations from all of the major banks and vehicle finance houses plus the monthly sales returns from thousands of dealers.
Von Höne said TransUnion dealer return information indicated that the premium and budget used sectors were experiencing the most pressure.
He said the premium market was under pressure because of the narrowing price gap between new and used cars, while the budget sector was being driven by high levels of competition between dealers, brands and marques.