“These results suggest that used cars aren’t necessarily as affordable as they were a year ago‚ while new cars are becoming more reasonably priced‚” de Vries said.
Due to the deflation in GDP South Africa experienced in the first quarter of 2017‚ the swing to used cars was dramatic‚ he said.
“In fact‚ total financial agreement volumes between manufacturers and dealers for new cars dropped by a sharp 14% between Q1 and Q2‚ in anticipation of the period of slow sales on new cars ahead.”
In a bid to arrest the trend‚ many manufacturers have now gone to great lengths to put together sweet deals.
“If you go onto the major manufacturers’ websites‚ you’ll see amazing deals such as R50,000 trade-in assistance; offers we weren’t seeing three months ago‚” de Vries said.
“We don’t know how long they will be able to sustain those deals‚ so now would be a good time to do the deal if you’re thinking about buying a new car.”
De Vries predicted a sharp increase in the sale of new vehicles in the coming months‚ along with a “marginal” decrease in used car sales as the quality of available cars diminished.
For the past six quarters‚ consumers have been faced with price increases at a rate well above that of the Consumer Pricing Index (CPI)‚ but the latest VPI was “a promising end to this trend”‚ de Vries said.
“Despite the recent political and economic uncertainty gripping the country‚ interest rates have remained fairly stable and the rand is performing surprisingly well. And while there’s no telling what could change over the next few months or years‚ those consumers who manage to secure a fixed – rather than linked – interest rate when financing their new cars should be in a better future financial position.”
• TransUnion AIS’s data only relates to financed vehicles‚ which account for about 45% of all vehicle sales in SA.
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