Growing demand for used cars slows new vehicle sales

The new vehicle industry's sales performance continued on its downward trajectory in August, according to the latest data from the National Association of Automobile Manufacturers of South Africa. Industry achieved sales of 46,146 vehicles last month, a year-on-year decline of 9.5%. Passenger sales remained weak, with a 13.1% decline, while light commercial vehicle (LCV) sales remained resilient with sales down only 1%.

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WesBank’s data also indicates that August’s weak new vehicle sales were driven by this year’s predominant trend: customers shifting to the used market. A total of 133,094 vehicle finance applications were received last month – year-on year growth of 3.7% – and the highest number of applications received for any month of 2016, so far. However, within this there was an 11.1% decline in applications for new vehicles, due to the shift to the used car market. Here, demand for used vehicle finance grew 11.2%, resulting in the used-to-new vehicle ratio growing to 1.67:1.

Buyers financing new vehicles are spending more than ever before, with the price of a new vehicle financed in August at nearly R297,000 – an increase of 13.4%, year-on-year. Demand in the used market drove up prices of pre-owned cars by 9.2% during the same period, with the average used deal now sitting at just over R190,000.

Exports offered a glimmer of hope, however. August's figure of 35,620 was nearly 27% higher than last year's 28,112. That took the year-to-date total to 232,324, up 3.1% from 225.415. This good news comes after numerous months of slowing growth.