The state of the new vehicle market in South Africa is under considerable strain and October was another woeful month with major declines seen across all vehicle segments. Despite these declines, export vehicle sales showed strength with significant year-on-year growth.
According to Wesbank, a major contributing factor to the continued slump in new vehicle sales is affordability. During the course of 2016, prices of new cars have soared as a result of a weakening Rand and many consumers simply can’t afford to buy new cars. To rub salt on an already festering wound, consumers are also faced with increasing living costs and higher interest rates, making it even more difficult to set money aside for a new car. Wesbank says that in October, the average new car financed was 12.7% more expensive compared to the same period in 2016. This grim reality is forcing consumers to seek value in the used car market.
Simphiwe Nghona, CEO of Motor Retail at WesBank said, “The new car market has been under pressure throughout the year, but receding consumer demand is even more pronounced. We’re seeing record numbers of applications for pre-owned vehicles. Consumers can get better value for money in the used market, where the average transaction value for financed a used car is nearly R100 000 less than a new car.”
Furthermore, Wesbank advises consumers to be mindful of their vehicle expenditure as this can have serious financial consequences on the household budget. “As we head towards the end of the year consumers should avoid the temptation to overspend, whether buying a new or used car. Any vehicle purchase now will have an impact on their budget for the next 4 – 6 years and they need to account for all monthly costs,” said Nghona. “This includes petrol costs, which are rising. If your budget cannot absorb these rising costs you might have an unpleasant festive season.”
1. Toyota – 11 129 units
2. Volkswagen – 8 055 units
3. Ford – 7 199 units
4. Nissan – 3 692 units
5. GMSA – 3 324 units
1. Ford Ranger – 2 964 units
2. Toyota Hilux – 2781 units
3. Volkswagen Polo Vivo – 2 701 units
4. Volkswagen Polo – 2 458 units
Toyota Corolla – 1 968 units
Search for a new or used Toyota Corolla on Cars.co.za
New vehicle sales outlook
Challenging times lie ahead for the new vehicle market and rising new vehicle costs, household disposable income pressure, low business confidence and higher interest rates will continue to have a negative impact on the market.
A leading Reserve Bank indicator has, however, registered growth for the first time in a three-year period, suggesting that modest improvements in the economy could be realised in the next 18 months.
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