Used vehicle market could improve says TransUnion

6 Nov 2013

The used vehicle market may soon improve‚ SA's automotive industry leaders attending the annual TransUnion Auto Trends Forum were told.

The used car market could pick up soon says TransUnion. Image: Surf4Cars

Vehicle risk intelligence company TransUnion Auto Information Solutions discussed whether the industry could anticipate some positive changes in the used automotive industry sector‚ despite the fact that the latest WesBank Dealer Confidence Index was at its lowest level in the past 40 months.

Nicholas Tuttelberg‚ director of business development at TransUnion Auto said analysis of TransUnion's 18m vehicle records indicated that used vehicle gross margins were beginning to lift.

"The average percentage gap between trade and retail values‚ which had been on a downward trajectory for two years‚ squeezing dealer margins‚ appears to have bottomed out in March this year‚" said Tuttelberg.

Used vehicle margins steady

TransUnion‚ however‚ was less optimistic about the outlook for the new car market. Tuttelberg noted that National Automobile Association of SA figures showed sales in the new car sector appeared to be returning to pre-financial crisis levels of between 55‚000 and 60‚000 units a month. He questioned whether this growth was sustainable given the fact that household debt remained high at around 75% of household income‚ despite lower interest rates.

"According to WesBank‚ there were indications that manufacturers' incentives and trade-in assistance could reduce towards the end of the year. Will this further reduce new vehicle sales - already 3.7% lower in September - for the remainder of this year?" he asked.

At the same time‚ consumers were holding on to their vehicles for longer‚ potentially making it difficult for dealers to replace vehicles. More than half of all new and used vehicle financing contracts (55%) were granted for a period of between 61 and 72 months.

Source: I-Net Bridge

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