Many used car buyers are opting for nearly new used cars rather than buying new models and suffering initial depreciation. Picture: SUPPLIED
Many used car buyers are opting for nearly new used cars rather than buying new models and suffering initial depreciation. Picture: SUPPLIED

There is a demand shift from used to new vehicles in SA, but the ratio of used car sales to those of new models is still at 2.09:1, which means that used sales are still more than double those of new cars. This is according to the TransUnion Vehicle Pricing Index for the first quarter of 2018.

The slowdown in the pre-owned market is due to the fact that manufacturers and importers are limiting price increases to help their dealers sell more new vehicles in a tough market. New vehicle buyers are therefore being offered preferential financial terms, trade-in assistance, free accessories and manufacturer discounts to boost sales.

Used passenger car finance deals have decreased by about 10% from the first quarter 2017 to the first quarter 2018, while finance deals for new cars have jumped 6% in the same period. During this comparison period new vehicle price inflation decreased from 8.8% to 2.4%, while used vehicle inflation is also marginally lower, from 3.7% to 2.9%.

In the first quarter of 2018 the composition of financed used car sales comprised 46% vehicles two years or newer, while 7% were dealer demonstration models.

USED PASSENGER CAR FINANCE DEALS HAVE DECREASED BY ABOUT 10% FROM THE FIRST QUARTER 2017 TO THE FIRST QUARTER 2018.

This demonstrates that many used car buyers are opting for nearly new used cars rather than buying new models and thereby suffering substantial initial depreciation. This pattern is reflected in an increase in the average used car loan, which is consistent at R242,000.

"All these factors about the buoyant used vehicle market in SA underline the importance of the Gumtree Auto Pre-Owned Vehicle Awards, which were launched last year, and the 2018 programme is now under way," says Jeff Osborne, head of Gumtree Auto.

"TransUnion Auto Information Solutions is a key partner in our awards programme as they provide all the relevant data to the organisers and judges."

TransUnion says it expects the vehicle pricing index trend to continue in 2018 with modest increases in sales volumes of new and used vehicles.

The positive exchange rate should ideally keep the input costs down, which will keep the price increases low, although the increase in VAT will lessen the positive effect.

Consumers are expected to continue placing much emphasis on the value proposition when shopping for a new or used vehicle. Toyota and Volkswagen are the dominant players in terms of financed sales volume in the used car market, taking 18.93% and 16.82% respectively. Next best is Ford on 11.73%, just ahead of Hyundai (9.37%) and Nissan (6.47%).

Volkswagen and Toyota also hold the lion’s share of the new car market in terms of financed volumes, with VW having 20.51% share and Toyota 19.02%. Ford is next best on 12.58%, followed by Hyundai on (10.74%).

Dominant players

Toyota, Nissan and Ford are the dominant players in both the used and new light commercial vehicle markets in terms of financed volume. Toyota leads the way in the used market with a 24.71% share, followed by Nissan with 20.15% and 19.51% for Ford.

Toyota is even more dominant in its share of the new light commercial vehicle market according to financed volume, with 25.85% compared to 21.01% for Nissan, in second place. Ford is third in this category with a share of 18.63%, with Isuzu fourth on 9.43%.

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