This is how much South Africans are spending on a new car right now

2 years ago 4

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TransUnion has released its latest Vehicle Pricing Index (VPI), showing that the South African car market came under renewed pressure in the first quarter of 2023 as the effects of fuel hikes, Inflation, challenging economic conditions and load-shedding took their toll.

The index measures the relationship between the increase in vehicle pricing for new and used vehicles from a basket of passenger vehicles incorporating 15 top-volume manufacturers.

TransUnion’s data showed that the South African vehicle market faced significant challenges as total financial agreement volumes in passenger vehicles decreased by 12% from Q1 2022 to Q1 2023.

This includes a decline in new vehicle finance deals of 2.6% YoY, while used vehicle finance deals decreased by 17.7% YoY.

This decline, the group noted, results from low economic growth, frequent power cuts and decreasing disposable incomes, creating a negative sentiment in the South African vehicle market, making it difficult for industry players to generate demand.

The group added that rising vehicle prices and diminishing disposable incomes made it challenging for consumers to purchase vehicles, resulting in motorists holding onto their cars for longer, which led to a shortage of high-quality used vehicles.

The TransUnion VPI report shows the used-to-new vehicle ratio declined to 1.86 from 1.98 in the previous quarter, meaning that 1.86 used vehicles were financed for every new vehicle.

According to the report, the percentage of cars – both new and used – being financed below R200,000 declined to 20% in Q1 2023 from 25% in Q1 2022, likely due to the increased average purchase price of new vehicles, leaving little choice for prospective buyers in this price band.

The under R200,000 band is the lowest it has been since TransUnion started the VPI in 2011.

The data further found that 30% of vehicle financing deals were for cars between R200,000 and R300,000, and 50% shopped for cars over R300,000. The report noted that this is a result of rising vehicle prices, with consumers forced to spend more for a reliable vehicle, while those in the used-vehicle market moved to older cars to meet their needs.

In light of these findings, BusinessTech looked at the number of options for prospective buyers in the under R200,000 price band and found only seven vehicles currently available in South Africa. These cars are listed below.

Suzuki S-Presso – starting at R169,900