The rate of change in new vehicle prices declined in the second quarter of 2022 but used vehicle prices continued to accelerate.
The latest TransUnion South Africa Vehicle Pricing Index (VPI) reveals that new car prices continued to lag inflation, with the rate of change in new vehicle prices declining to 3.9% in the second quarter of this year from 6.0% in the first quarter of 2022.
South Africa’s overall inflation rate was 5.9% in both March and April this year, but surged to 7.4% in June, the highest level since May 2009.
The rate of change in used vehicle prices soared to 8.3% in the second quarter from 4.9% in the previous quarter to continue the trend of used vehicles becoming relatively more expensive.
TransUnion also highlights that the recovery of South Africa’s automotive industry from the impact of the COVID-19 pandemic continued in the second quarter of 2022.
It says the number of vehicle deals in the second quarter of 2022 is at levels last seen before the pandemic.
The firm says a growing number of those deals are for new cars, with the number of new passenger finance deals increasing by 34% year-on-year in the second quarter while used passenger vehicle deals grew by 5.4%.
Kriben Reddy, vice president of auto information solutions for TransUnion Africa, cautions that the increased vehicle sales numbers should be seen in context, and lagging indicators, such as rising interest rates, could still impact the industry going forward.
“The market is heading in the right direction, but we have to remember that a year ago we were in the midst of Level 4 lockdowns and civil unrest, which depressed the market severely.
“We’re also almost certainly going to see the impact of rising inflation and interest rates at a time when household incomes are not growing at the same levels,” he says.
Reddy says the ratio of used to new vehicles sold shifted significantly in the second quarter of 2022 because of the recent pricing trends.
TransUnion reports that the number of used vehicles sold for every new vehicle sold declined to 2.1 in the second quarter of 2022 from 2.67 in the corresponding quarter in 2021. It adds that 27% of used cars sold were under two years old and this continues to decrease as the supply of quality used vehicles remains under pressure.
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