Used vehicle sales gained ground in the last quarter of 2011 compared with new cars sales, boosted by price inflation which dropped to its lowest level in two years.
According to the latest vehicle pricing index (VPI) released recently by TransUnion Auto Information Solutions, used vehicle price inflation dropped to 0.7% while new car price inflation rose to 4%, an increase of more than 2.0% over the previous quarter.
Annual new vehicle price inflation for 2011 dropped to 3.4% (2010: 4.7%), while used car inflation fell to 2.7% (2010: 4.4%) for the year.
The VPI is published quarterly and measures the year-on-year price inflation of a market weighted basket of new and used vehicles.
Used cars back in favour
Based on TransUnion’s new and used financial registration statistics obtained from SA’s major vehicle financing institutions, the ratio of new to used vehicle sales swung back in favour of used cars as the year drew to a close.
TransUnion Auto CEO Mike von Hone said highly competitive deals on new vehicles available to consumers during the year resulted in new car price inflation dropping to 1.8% in the third quarter. Fewer of these deals now appeared to be available.
“Most manufacturers introduced price increases in the last few months of the year on the back of bumper sales of new vehicles throughout the year. This has resulted in quite a significant increase in new car prices – a trend which could well continue into 2012,” Von Hone added.
The National Association of Automobile Manufacturers of SA statistics revealed that new passenger sales increased by approximately 17% and light commercial vehicles rose by 11.6% during the year, with an overall market growth in the region of 15.6%.
Looking ahead to 2012, Von Hone said the momentum of the recovery in the new vehicle market could be undermined if inflationary pressures forced the Reserve Bank to increase interest rates in the coming months.
“However, should the repo rate remain unchanged for longer and the rand maintain its current position – thus allowing manufacturers to avoid significant price increases – the overall vehicle market will benefit,” he concluded.