Are SA automobile shoppers being taken for a dawdle? 2020 costs overshoot inflation

South African current automobile shoppers were collectively paying bewitch costs above the inflation payment for the third consecutive quarter in Quarter 4 (Q4) in 2020 and worth are continuing to climb “smartly above the inflation payment”.

This is in step with a laborious-hitting and the most recent TransUnion SA Automobile Pricing Index (VPI) file released leisurely final week (11 February 2021).

The VPI is released by TransUnion — a automobile threat intelligence company — on a quarterly foundation. The corporate calculates the VPI from recordsdata it collates in accordance to monthly sales returns from thousands of South African dealers and automobile financing registrations from both well-known banks and automobile finance homes.

SA auto industry in for a demanding 2021

In accordance to TransUnion, the South African car industry faces a demanding 2021, with current automobile costs continuing to climb smartly above the inflation payment in a market already severely constrained by the financial results of the COVID-19 pandemic.

TransUnion made it clear that it change into no longer easiest automobile shoppers that had and would feel the impacts of the worth pinch, nonetheless that the auto industry as an total, and automobile dealerships in explicit, had fielded a demanding 2020 procuring and selling year.

“…the most recent TransUnion SA Automobile Pricing Index (VPI) presentations automobile costs rose above the inflation payment for the third successive quarter in Q4 2020 at a time when shoppers are financially constrained and so a lot of automobile dealers are scuffling with to cease in industry,” acknowledged TransUnion in its summary of its findings for 2020.

Automotive costs might perhaps well well magnify extra this year

And the execrable news for shoppers, in step with Kriben Reddy, vice president of car records solutions for TransUnion Africa, is that this style might perhaps well well herald extra automobile phrase increases in 2021.

“The wearisome indicators of decrease petrol costs, ardour charges and inflation are no longer ample to circulation shoppers into current automobile purchases at this stage, with user confidence low as a results of the COVID-19 pandemic and ongoing unemployment payment issues, detrimental financial boost charges and stress on disposable profits all having an impression,” acknowledged Reddy.

Gross sales volumes down, costs up in 2020

TransUnion acknowledged that as expected, complete financial agreement volumes within the passenger automobile market decreased by 9% in Q4 2020 when when compared with the same duration in 2019, with current automobile finance deals down 14.8% and frequent vehicles down 6.2%. On the same time, the VPI for current vehicles rose sharply to 9.6% in Q4 2020 from 2.9% in Q4 2019, with the frequent automobile VPI rising to 2.9% from 1.2% over the same duration.

The VPI measures the connection between the magnify in automobile pricing for current and frequent vehicles from a basket of passenger vehicles in accordance to recordsdata from 15 high volume producers.

“The index is created using automobile sales recordsdata from across the industry,” explained TransUnion.

Damaged-down vehicles outsell current

The frequent-to-current automobile ratio in Q4 2020 remained largely consistent, at 2.31. This implies that for every current automobile financed, 2.31 frequent vehicles are financed. The procedure-up of frequent automobile sales presentations that 35% of vehicles financed are beneath two years old, with demo fashions making up 6% of frequent financed deals, which indicates an ongoing preference for older vehicles whereas stress on disposable profits stays.

“The proportion of cars (current and frequent) being financed beneath R200 000, R200 000 to R300 000 and over R300 000 observed a clear circulate out of the beneath R200 000 bracket in direction of vehicles within the R200 000-R300 000 bracket. This reflects the truth that as inflation drives current automobile costs up, there is a higher ask for frequent vehicles, which in flip drives frequent automobile costs up as smartly,” commented TranUnion.

Perfect news for exports

South African automobile export market, on the different hand, is forecast to procure better in accordance to the global financial system. While complete exports declined 30% from 2019 to 2020, right here’s expected to style with the COVID-19 waves, which is the largest underlying factor impacting ask factual now.

Seek recordsdata from industry adjustments in 2021

Where 2020 change into a time of ‘preserving the lights on’ for so a lot of dealers and industry gamers, Reddy believes the theme for 2021 will shift more to refocusing and recovery as the industry looks to adapt to current procuring patterns and buyer behaviours.

This includes repurposing local manufacturing vegetation to meet the growing ask for electric vehicles, and dealers having a survey to digital instruments to transform the procuring and selling ride for shoppers.

“This is a tough time for dealers, and 2021 will nonetheless be a demanding year. We’re confident that we can look an magnify in automobile sales over 2020, nonetheless the accurate reference will most likely be how quickly we are able to procure better to 2019 stages,” acknowledged Reddy.

South Africa’s automobile producers’ consultant physique The Nationwide Affiliation of Automotive Producers of South Africa (Naamsa), noted a year-on-year decline of 19.8% in current passenger vehicles from Q4 2019 to Q4 2020. Protection Status

Back to top button