The one type of used car that got cheaper in South Africa in 2024

The price of used cars has gone up by as much as 8% in the first quarter of 2024, but there is one body type that has defied the trend.

While the majority of cars saw an increase to their sticker of around 4.7% in the first three months of this year, premium SUVs were the only category to witness a small decrease in price, according to the latest vehicle pricing index from TransUnion.

Monitoring trends

The vehicle pricing index (VPI) measures the relationship between the increase in vehicle pricing for both new and used models from a selection of passenger cars in South Africa from the 15 most popular brands, essentially serving as a barometer of inflation within the automotive industry.

Looking at the pre-owned sector, premium hatchbacks that are three years old saw by far the biggest spike in price, indicating that these models are currently in high demand from local buyers.

Most other body types and segments saw an increase of between 1.5% and 3.2%, but there is one exception with premium SUVs that are only one year old, which you can see in the graph below:

It may be possible that this segment saw a drop in demand owing to the sought-after various options entering the new market in 2024, from the recently launched next-gen Toyota Prado to the upcoming VW Tiguan and Touareg.

It is not just limited to premium models either, as the normal SUV body type saw the lowest hike in used-vehicle prices compared to other segments.

Interestingly, crossovers were several points higher than SUVs, and hatchbacks were the worst affected overall.

Since hatchbacks are generally one of the most affordable body styles on the market, the demand is likely driven by consumers looking for a budget-friendly set of wheels at a time when the new-car sector is moving away from smaller models in general.

Looking at the VPI for new models shows a similar trend, as SUVs saw the smallest increase in the first quarter of 2024, while hatchbacks and crossovers saw an uptick above the rate of inflation, which has been hovering around 5.3% on average.

According to Naamsa, new passenger vehicle sales dropped by 8.4% between the first quarter of 2023 and 2024, and total vehicle finances decreased by an even larger 10.6%.

Off the back of a lower appetite for car purchases, the VPI for new vehicles decreased from 6.3% to 4.7% in Q1 2024, while that of used models dropped substantially from 8.1% to 2.1%.

“The significant slowdown in used-vehicle price inflation, combined with relatively lower new-vehicle price increases and manufacturer incentives, is making new vehicles increasingly attractive to buyers entering the market,” said TransUnion.

This is reflected by the fact that the used-to-new car finance ratio has dropped from 1.86 to 1.15 in the last year, meaning that motorists are now financing roughly 1.2 used cars for every new one that moves off the showrooms in South Africa.