Why South Africa’s car market could be on the road to recovery
The local car market showed signs of resilience in Quarter 3 of the year, bouncing back from an all-time low Q2, to record month-on-month increases in the number of new and used cars financed in August and last month, according to the latest TransUnion SA Vehicle Pricing Index (VPI).
While financial agreement volumes in the passenger market showed 21% year-on-year decline from Q3 last year, the market overcame rising vehicle prices, difficult trading to record 35% and 45% month-on-month increases in August and last month respectively, albeit off a low base.
This suggests that while challenging times lie ahead, the industry could be on the road to recovering from the shutdown caused by the Covid-19 pandemic, said Kriben Reddy, the vice-president of auto information solutions for TransUnion Africa.
“Overall, the global automotive industry has had another challenging quarter. In South Africa, it has been a quarter of gradual recovery in terms of business and consumer confidence, new vehicle sales, finance applications and overall demand. While the automotive industry is not yet out of the woods, the small gains made towards the end of the quarter off the back of record lows in Q2 is a real positive for the industry,” said Reddy.
The VPI showed that new vehicle pricing rose above inflation for a second-successive quarter.
The VPI for new vehicles moved to 7.6% in Q3 this year, from 3.3% in the same period last year, with the used vehicle VPI rising to 2.3% from 1.1% in Q3 last year. This follows 10 quarters of vehicle price increases remaining below inflation, and could herald a cycle of further increases, said Reddy.
The local car market showed signs of resilience in Q3, the latest TransUnion Vehicle Pricing Index shows.
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