According to TransUnion‘s new vehicle pricing index (VPI) for the fourth quarter of 2021, price increases for new cars in South Africa have slowed significantly.
This means that while new cars are still getting more expensive in the country, they are doing so at a slower rate.
The inflation rate for new vehicle prices steadily declined in 2021, seeing a move from 9.6% in Q4 2020 to 2% at the end of Q4 2021.
During the same time, used-car prices shot up – with the VPI for these vehicles going from 2.9% in Q4 2020 to 7% at the end of Q4 2021.
“The VPI measures the relationship between the increase in vehicle pricing for new and used vehicles from a basket of passenger vehicles which incorporates 15 top volume manufacturers,” said TransUnion.
The last time the new vehicle index was at this level was in Q4 2011, while the used vehicle index has not been this high since Q1 2004.
“For South Africa’s beleaguered consumers, there’s rarely been a better time to get into the new car market in the past decade,” said TransUnion.
The graph below shows the change in the VPI from 2010.
In the fourth quarter of 2021, 83,490 used and 36,128 new vehicles were financed in South Africa.
“Of the used vehicles, 33% are less than two years old, and this continues to decrease as the supply of quality used vehicles remains under pressure,” said TransUnion.
“Demo models financed made up 5% of used financed deals in the quarter, down 1% from the previous quarter, which indicates consumers remain in the market for older vehicles as quality supply diminishes and pressure on disposable income increases.”
The most popular finance band was the R300,000-and-up segment, with 44% of the cars financed falling in this range.
The R200,000 to R300,000 price bracket was the second most popular at 29%, followed by the under-R200,000 bracket with 27%.
Much of the activity that was usually found in the sub-R200,000 range moved up a bracket during Q4 2021, which “shows consumers are looking for value in the used vehicle market despite recent interest rate hikes,” said TransUnion.
Hatchbacks and SUVs were by far the most popular options for South Africans financing vehicles, with these two body styles making up over 70% of all vehicles financed in Q4 2021.
In addition, consumers between the age of 26-40 financed significantly more vehicles than any other age group – with 46% of new cars and 52% of used cars financed by a person in this group.
Total financial agreement volumes in the passenger market increased year-on-year by 2.8%.
The graph below shows financed vehicles by body type.