Although challenging economic conditions, inflation, and fuel hikes are the primary reasons why car buyers are turning to the used vehicle market, inflation-busting price hikes are now causing consumers to reconsider the second-hand option.
According to the report, the percentage of cars—both new and used—being financed below R200,000 declined to 18% in Q4 2023 from 19% in Q4 2022, likely due to the increased average purchase price of new vehicles, leaving prospective buyers little choice in this price band.TransUnion 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.
The country’s pre-owned sector has taken off amid higher fuel prices and a challenging economic environment. Transunion noted that this marks a significant shift in consumer behaviour, potentially driven by increased confidence, vehicle availability, and the financial practicality of opting for new over used vehicles“The South African vehicle market is navigating challenges predominantly rooted in a tough economic environment characterised by escalating inflation, higher fuel costs and currency fluctuations.