Discover the latest trends in South Africa’s car market and how economic challenges are impacting on prices and consumer preferences!
In South Africa, economic difficulties, inflation, and fuel price hikes are prompting car buyers to rethink their options. While the used car market was once favored, recent increase on prices, in both new and used vehicles, are causing consumers to reassess.
According to TransUnion’s latest Vehicle Pricing Index (VPI) for Q4 2023, car prices have risen above inflation rates in South Africa. New vehicles saw a 6.3% increase, while used ones hit 6.4%. Particularly, older cars (over three years old) saw significant jumps, ranging from 14.6% to 16.7%.
The report also highlights changes in financing patterns. The percentage of cars being financed below R200,000 decreased to 18%, marking a 1% drop from the previous 19% of Q4 2022. The data shows that 27% of vehicle financing deals were for the ones priced between R200,000 and R300,000, and 55% for above R300,000.
This is a result of the increase on vehicle prices, forcing consumers to spend more money on a new reliable vehicle, while in the used vehicle market people moved to older cars to meet their needs.
“The average financed amount for vehicles rose to R396,000 in Q4 2023 from R386,000 the previous year, reflecting a growing market trend”, TransUnion said.
During economic challenges, the pre-owned sector has grown. However, the ratio of used-to-new car financing has declined from 1.9 in Q4 2022 to 1.2, indicating a shift towards financing more new vehicles. This change suggests consumers may be finding better value in new ones compared to used ones.
Although the tough economic environment in South Africa has led to an increase in car prices and decrease in vehicle sales, there’s optimism as manufacturers introduce discounts and incentives, potentially aiding market recovery and growth, allowing consumers to explore more cost-effective options.
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