According to naamsa | the Automotive Business Council, the new vehicle market sold 38,337 units during May this year. While unfair to compare this against May 2020 (up 197.8%), it is noteworthy that this represents a 7.6% growth over last month’s sales.
“The market continues its slow recovery in the face of a number of challenges and opportunities,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Interest rates remain at historical lows, providing some of the most affordable finance and consequently opportunities to purchase a new vehicle. However, price inflation against the backdrop of a subdued economy continues to be a barrier for many purchase decisions.”
According to the latest Vehicle Pricing Index (VPI) released by TransUnion during May, new vehicle prices in South Africa rose at nearly three times the general inflation rate during the first quarter of 2021. “When measured against WesBank’s average deal size, we can see a similar trend in the amount of finance to access these vehicle purchases,” says Gaoaketse. “Compared to a year ago, new vehicle finance agreements through our book are averaging a deal size of R356,313, up 11,2%, while pre-owned deals average R253,537, an increase of 10,6%.”
Demand for vehicle finance continues to be reassuring, however. “WesBank’s rate of applications remains robust, indicating an appetite for new and used vehicle purchases,” says Gaoaketse. “Attractive deals on the showroom floor and a growing need for replacement as that cycle increased over lockdown are contributing towards the market’s recovery.”
Supporting this demand, the passenger car segment sold 24,122 units during May, 85,1% of which were retailed through dealers to consumers. Dealer channel sales remain relatively robust and are 41,7% ahead year-to-date, for which retailers will be grateful. This segment was 7,1% ahead of April sales.