According to the latest from TransUnion SA Vehicle Pricing (VPI), the car market in South African is showing some resilience as it appears to be bouncing back in Q3 2020 after it hit a record low in Q2.
The VPI looks at the relationship between the increase in vehicle pricing for both new and used vehicles from passenger vehicles, which includes 15 top volume manufacturers.
The total financial agreement volumes showed a 21% decline in the passenger market when compared to Q3 2019. However, the market fought off rising vehicle prices, uncertainty and difficult trading conditions to show a 35% increase in August and a 45% increase in September, but keep in mind these are recorded off a low base.
Even though difficult times are still ahead, the car industry might just recover from the total shutdown because of COVID 19.
The auto information solutions for TransUnion Africa vice president, Kriben Reddy, said that even though the automotive industry globally has had a difficult quarter, in SouthAfrica, the quarter is marked with gradual recovery in regards to new vehicle sales, business and consumer confidence, finance applications and overall demand.
He went on to say that the automotive industry is not out of the woods just yet, but it’s looking positive as small gains were made off the back of the record low of Q2.
VPI showed that vehicle prices are increasing and new vehicle prices are above that of inflation for the second quarter running and used vehicle prices have also increased in this quarter.
Reddy also said that with interest rates dropping to an all-time low, there are consumers who will be able to take advantage of this from an affordability perspective. However, lenders are facing high failure rates and will need to manage key metrics in order to minimise their risk. This can be done through amending thresholds like loan terms, loan to value ratios and balloon payments.
According to Reddy, dealers and consumers will need to be cautious in terms of the vehicles they purchase in the coming months because of de-fleeting and potential vehicle repossession due to defaulting on payments.