The latest TransUnion Vehicle Pricing Index (VPI) shows a contraction in the New Vehicle Sales Market for the Seventh consecutive quarter.
Economic pressure from fuel price increases, the results of load shedding and a generally challenging outlook saw New Vehicle Sales in South African fall nearly 10% year-on-year in Q1 of 2019, according to the latest TransUnion SA Vehicle Pricing Index (VPI).
This is the seventh consecutive quarter of contraction for the local car market – and a dangerous sign for the greater economy, with the industry contributing an estimated 7.7% of the country’s annual GDP.
On the positive side, vehicle exports are on the rise, growing year-on-year by 29.5% in January, 22.5% in February and 23.7% in March.
“Load-shedding has played a role in the overall market’s decline, with the number of valuations being done and the volume of footfall through dealerships being clearly affected by power outages,” says Kriben
Reddy, head of TransUnion Auto.
“While there’s consensus that we’ll see a minor recovery in the industry in the second half of 2019, there’s a real fear that it won’t be enough to compensate for the first half decline”.
The broader economic pressures being felt by consumers is played out in the fact that more consumers are buying used vehicles than new vehicles.
The TransUnion VPI report shows the used-to-new vehicle ratio declined to 2.13 from 2.09 in the previous quarter, which means that 2.13 used vehicles were financed for every new vehicle financed.
People are also spending less on cars, with the percentage of cars (both new and used) being financed below R200 000 staying steady at 37%, which is consistent across the last three quarters.
The TransUnion Africa Vehicle Price Index (VPI) measures the relationship between the increase in vehicle pricing for new and used vehicles and uses vehicle sales data collated from across the industry.