SA used car sales surge
Sales figure released last week show that New Car sales in South Africa have been declining but Used Care sales have exploded. According to the National Association of Automobile Manufacturers of South Africa (Naamsa), industry total sales declined by 1.4% year-on-year, with a total of 55,722 units sold. Of that total, passenger sales accounted for 37,953 units, a 2.7% decline, year-on-year while the Light Commercial Vehicle (LCV) segment moved 14,942 units, representing year-on-year growth of 2.1%. Dealer sales declined by 1.8%, year-on-year, with rental fleet sales up 3.6%, year-on-year, mitigating the effects of a shrinking market. WesBank data shows applications for credit grew by 17.5%, year-on-year, with the lion’s share of demand seen in used-car finance applications, with 17.7% year-on-year growth. WesBank attributes the decline in demand for new vehicles to a number of factors, including substantial price increases for new vehicles, interest rate hikes, and buyers exhausting their affordability measures. Compared to the same period last year the average deal value for new vehicles has grown by 7.9%, outpacing the country’s current inflation rate.
Those buyers who do choose to purchase a new vehicle have to contend with higher interest rates, as the most recent decision by the Reserve Bank saw a 25 basis points hike, and a shrinking number of options to reduce monthly repayments. The average contract period for new vehicles is 69 months, fast approaching the 72-month limit imposed by banks. Rudolf Mahoney, Head of Research, Wesbank said, “New vehicle prices are putting pressure on buyers’ budgets, even after exercising options such as longer repayment terms.” WesBank anticipates that the market will continue to see a shift to used vehicles, where buyers find better value for money. The used-to-new ratio is currently at 1.43:1, a high last seen in January 2012 when the new vehicle industry was recovering from a down cycle in the economy. Simonis Storm Securities indicated that for July, a total of 1919 units were sold in Namibia, a 1.9% month on month increase. Passenger vehicle sales increasing 13.2% month-on-month, and commercial vehicles increasing 4.1% month-on-month.