According to the Vehicle Pricing Index (VPI) for the first quarter of 2021, released by TransUnion, new vehicle prices in South Africa have been rising for four consecutive quarters.
“New vehicle prices rose by almost three times the current inflation rate,” said the credit agency.
“New vehicle price increases are above inflation, and we expect this to increase over the coming months.”
TransUnion’s VPI measures the relationship between the increase in new and used vehicle prices from a basket of passenger vehicles sold in the country.
The report states that several factors – such as increased unemployment, negative exchange impact, negative GDP growth, and tighter consumer budgets – all contribute to the slow recovery of South Africa’s motoring industry.
“Low interest rates and low inflations were not enough to lure consumers into purchasing new vehicles,” added TransUnion.
“New vehicle finance deals were down by 5%” as a result.
Prices of used vehicles also increased in real terms for the first time since 2010, it said.
“The supply of quality used vehicles came under sustained pressure, which is expected to continue to push prices of used vehicles up for the foreseeable future.”
The good news
Despite the increase in prices, TransUnion said that good news also came out of the first quarter.
Used vehicle finance deals were up by 7.4%, while the used-to-new vehicle ratio stayed consistent – at 2.4 used vehicles financed per 1 new vehicle.
The total finance agreements in the country went up by 3%, it added.
“The export market remained resilient through the pandemic – total exports increased by 4% in Q1 2021, compared to the same period last year,” it said.
The right to repair legislation, which wall take effect on 1 July 2021, will also give consumers more freedom over their purchasing decision.
“Under the new consumer rights framework, the costs for service and maintenance plans and value-added products must be disclosed separately to the new list price of a vehicle, and the consumer is given the opportunity to decline it if they wish,” concludes TransUnion.
Below is TransUnion’s Vehicle Pricing Index for the first quarter of 2021.