Vehicle price increases slowing down?

New and used car inflation slowed to its lowest level this year‚ touching 2.3% and 2.1% respectively‚ according to the third quarter Vehicle Pricing Index (VPI).

Published quarterly by vehicle risk intelligence company‚ TransUnion Auto Information Solutions‚ the VPI measures the year-on-year price inflation of a market weighted basket of new and used vehicles.

"Both the new and used markets remain relatively strong with the used market having experienced positive growth of 4.1% for the quarter.

According to National Association of Automobile Manufacturers of South Africa (Naamsa)‚ new passenger sales increased by 12.5% year on year in August‚ and "we expect this double digit trend to continue for the remainder of this year‚" said Mike von Höne‚ chief executive of TransUnion Auto.

The lower growth in the used market has led to a further narrowing of the sales ratio between new and used cars‚ TransUnion said.

Analysis of TransUnion's vehicle financial registration data reveals that the ratio of new to used vehicles financed is now 1.63 used cars for every new car financed in August‚ down from 1.88 in May.

"Interestingly‚ around 80% of all new and used cars financed are priced at less than R200‚000. When one considers that only 15.5% of all new cars fall within this price bracket and 66.5% cost more than R300‚000‚ it is clear that consumers remain extremely price sensitive‚" Von Höne said.

"This appears to be impacting on dealers. In a market that remains exceptionally competitive‚ dealers are buying and retailing vehicles at less than the Auto Dealers' Guide values."

TransUnion's dealer return information indicates that the premium and budget used sectors are experiencing the most pressure - the premium market because of the narrowing price gap between new and used cars while the budget sector is being driven by high levels of competition between dealers‚ brands and marques‚ it said.