Do you want to buy a new car? With the decreased hikes in car prices this year, now might be a good time to invest in a brand new vehicle. Read our blog post to discover why it’s a good time to invest in new cars.
Vehicle Pricing Index
The Vehicle Pricing Index, which was compiled by TransUnion, shows that there has been a reduced increase in car prices when compared to previous years. The VPI revealed that the cost of new cars increased by a minimal 2.3% while the price of used cars increased by 2.9%. This is a significant decrease in the price hikes of 8.8% and 3.7% that the automotive industry experience during the first quarter of last year. The VPI analyses connections between the expenses of buying a vehicle from one year to another. To compile the report, information was used from 15 of South African motorists’ most popular auto manufacturers. The price hikes are below inflation levels, which have increased the affordability of purchasing new and used cars in South Africa. With an increase in affordability, it’s a great time to buy a new car.
The local market
There are an estimated 450 000 to 500 000 new cars being purchased in South Africa annually. While there have been improvements in the market, the automotive industry is still aiming to achieve the 2007 levels of sales again. The market was at its lowest during 2017, however, it has started to improve again. The sale of used cars on the local market has decreased in the first quarter of 2018. The used-to-new ratio fell from the first quarter in 2017 to the first quarter in 2018. This ratio dropped significantly from 2.49 to 2.09. The weakened Rand resulted in an increased cost of new vehicles which caused South Africans to turn to the used car market in 2017. However, the improvements in the affordability of new cars have seen many local motorists investing in new vehicles during 2018. The report shows that motorists are more focused on getting great value for money when they choose a vehicle. The affordability of the car has a huge impact on their purchasing decision.
Automotive companies have been impacted by VAT increases, which came into effect in South Africa on 1 April. Valorem tax also had an effect on the industry. Financial markets have had a favourable reaction to efforts to improve the local economy, which has resulted in decreased interest rates. The positive developments in the automotive industry have been attributed to the decreased inflation rate, lowered interest rates and stronger Rand. The majority of vehicles in South Africa are imported, which means that the value of the Rand has a huge impact on their price. These factors enable automotive manufacturer’s to limit price increases. It is predicted that these trends will continue during the following quarter with the stronger Rand keeping large price hikes at bay. With the decrease in price hikes for new cars, the services and warranties that accompany new vehicles are even more appealing to buyers.
If you plan to buy a new car, take a look at the six cars you can buy in SA for less than R150 000. With the strengthening of the rand and reduced interest rates, it’s the perfect time for South African motorists to invest in new cars.