The South African automotive industry grapples with ongoing economic challenges, impacting both new and used vehicle sales. However, a recent report by TransUnion reveals a significant shift in consumer behaviour: a growing preference for new vehicles.Used-to-new ratio shift: TransUnion's Q1 2024 vehicle pricing index shows a significant drop in the used-to-new ratio of financed vehicles, from 1:86 in Q1 2023 to 1:15 in Q1 2024. This indicates a growing preference for new vehicles.
Modest price increases: New vehicle price growth sits at 4.7%, compared to 6.3% in Q1 2023. Used vehicle prices also saw a slowdown, with a 2.1% increase compared to 8.3% the previous year. Cautious consumer sentiment: High interest rates and negative GDP growth contribute to a cautious consumer approach. Many are delaying vehicle purchases and holding onto existing cars longer.Affordability: Relatively lower new vehicle price increases and dealer incentives are likely driving the shift towards new cars.
Multi-purpose vehicles: Consumers are consolidating their needs, opting for one multi-purpose vehicle instead of maintaining multiple cars. Alternative transportation: Ride-hailing services and car subscriptions are becoming attractive options for some consumers.Financial Inclusion: TransUnion highlights opportunities to expand credit access to previously underserved markets for potential market growth. These include refinancing and insurers reassessing customer vehicle values in the changing market.The South African vehicle market faces ongoing economic pressures.