What the average South African owes on their car right now

TransUnion’s latest overview of consumer credit trends for Q1 2023 has revealed that the average South African owes R227,975 on their car right now.

With approximately 2.2 million accounts registered, this works out to a total outstanding balance of over R502 billion on vehicle payments, up 7.4% over the first three months of 2022.

The rise in value of total outstanding payments comes despite origination volumes – i.e. the number of new loans – dropping by -6.8% to a total of 123,124, and can be attributed to an uptrend in car prices over the last year.

“This trend was linked to the higher cost of vehicle ownership, and further supported by the TransUnion Vehicle Price Index which shows over 50% of financed vehicles were above the R300,000 value range,” said TransUnion.

“These larger loans, combined with a 50bps increase in the repo rate, led to a 7.4% increase in outstanding balances, and a 6.7% increase in average balances year over year.”

At the end of Q1 2023, the average new loan amount on a car finance contract rose by 6.5% year-on-year to R386,116 – which is equal to the price of a new Haval Jolion Luxury.

New car prices are still going up

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, showed TransUnion’s 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 to hold on to their cars for longer.