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Sunday / 16 February 2025
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How fast car prices are climbing in South Africa

New car prices in South Africa inflated by an average of 6.3% in the first quarter of 2023, up from 4.0% during the same period last year, with prices for used vehicles seeing an even more dramatic rise of 8.1% in Q1 2023, compared to 7.9% in Q1 2022, shows data from TransUnion’s latest vehicle pricing index (VPI).

“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 uptrend in the VPI is characterised by challenges faced by consumers and businesses in the harsh economic climate, combined with limited stock in the pre-owned sphere pushing people into the new-car segment.

Car manufacturers and industry participants are also finding it difficult to generate demand for new products and services due to low economic growth rates, power cuts, and decreasing disposable incomes.

As such, buying patterns in the South African vehicle market are increasingly being shaped by rising interest rates and fuel price hikes, leading consumers to downgrade to cheaper vehicles or from two-car to one-car households.

New vs Used

In light of the rapid rise in prices of used cars, this segment of the market took a beating during the first three months of 2023, matching used-to-new purchasing levels last seen in 2015.

On average, 1.86 used vehicles were bought for every new vehicle – down from a ratio of 1:2.18 in Q1 2022 – resulting in a total of 40,054 new compared to 74,566 pre-owned cars financed during Q1 2023.

Meanwhile, demo models financed remained relatively consistent at 4%, which “may indicate that consumers are either being driven towards the new vehicle market or that they are opting for significantly older vehicles as the supply of more recent models diminishes and price increases exceed earnings growth,” said TransUnion.

“This trend poses potential opportunities for the servicing industry, as older vehicles that are out of motor plan will require more maintenance and repairs to keep them roadworthy. However, it also raises concerns about vehicle safety and emissions, which could lead to increased scrutiny from regulatory bodies in the future.”

Preferred price brackets

Of all the vehicles purchased in the first quarter of 2023, both new and used, the most prominent price band was R300,000 and above, which is unsurprising considering the noticeable jump in the VPI.

Approximately 50% of all finance agreements came in over R300,000, with the R200,000-R300,000 price band accounting for 30%, and the below-R200,000 price band for 20%.

The sub-R200,000 bracket is now at the lowest point it has ever been since TransUnion started tracking data in 2011, which is “indicative of the ongoing industry price increases from the used vehicle space,” said TransUnion.

“Rising vehicle prices and diminishing disposable incomes made it challenging for consumers to purchase new vehicles. Subdued consumer confidence led to hesitancy in longer-term agreements; some explored vehicle rentals as an alternative to traditional financing options.”


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