Slowdown in used car prices predicted – TransUnion
New vehicle shortages, increased interest rates, and other economic challenges forced many car buyers into the used car market which of course, resulted in higher prices being paid for used cars. Market forces will, however, in time, slow this trend down.
New vehicle availability is returning to normal and TransUnion’s latest vehicle pricing index (VPI) showed the vehicle price inflation of new vehicles rose sharply year-on-year, moving from 3.8% in Q3 2021 to 6.8% in Q3 2022, with the used vehicle index rising from 5.9% to 9% in the same period. In contrast, South Africa’s overall inflation rate eased to 7.6% in August after hitting a 13-year high of 7.8% in July.
Passenger sales increased by 8% year-on-year with new vehicles soaring 21% in this period, compared to a 3% rise in used vehicle volumes.
This, says Kriben Reddy, vice president of auto information solutions at TransUnion Africa, “is partly due to consumers re-entering the market as new vehicles became more readily available following supply chain issues”.
“Price inflation will remain sticky at elevated levels,” said Reddy, and the current ratio of used to new vehicles sold stands at 2.1.
One in three vehicles financed were hatchbacks while more than one in five were SUVs.
There is more activity within the R300 000 plus price market than in the R200 000 and under.
“What’s becoming clear is that the South African automotive industry can’t rely on traditional vehicle ownership to drive itself forward. While the market is still dominated by a vehicle ownership based model, the real opportunity going forward lies in enabling alternative mobility models such as subscription services, which open up entirely new audiences and segments to the industry, and create opportunities for broader mobility inclusion,” concluded Reddy.
Source: TransUnion
