Johannesburg - The new year has ushered in relatively mild new-vehicle price increases in South Africa - with a few notable exceptions - as the auto industry bids to win back consumers after a stagnant market in 2014.
Last year saw a 0.7% decline in new-vehicle sales to 644 523 units after four consecutive years of growth, as consumers felt the pinch of slightly higher interest rates, above-average price increases, and tougher credit restrictions at banks. Price hikes hit hard last year with new-vehicle inflation averaging 7.15% compared with 3.8% in 2013, while also affecting sales was the fact that fewer people were granted finance, particularly in the entry-level car segment where the credit approval rate dropped from over 40% to approximately 25%.
The good news is that new-car price inflation seems to be flattening out, and the market can look forward to price stability in 2015. However, the performance of the rand remains a risk.
Price increases in 2014 saw locally-built vehicles rising about 4% and imports around 8%, and this disparity will likely continue in 2015 if our currency continues its weakness.
MILD PRICE HIKES
A number of auto companies raised their new-vehicle prices this month and the increases were generally mild, in the 1-2% range, while some brands kept their prices the same. However, bucking the trend was Mercedes which hiked its prices between 3.5 and 5%, and 7% in the case of the E-class. Jeep’s increases were also above the industry average at around 3.5%, up to 7.7% for certain of its Cherokee derivatives.
The Juke took a price leap of between 3.9% and 7.4% depending on model, in contrast to the rest of Nissan’s line up which averaged an increase of around 1.5%.
Industry experts predict another tough sales market in 2015 due to potential interest rate hikes, along with possible developments around changes in company car taxation. However offsetting this is the recent hefty fuel price reduction which gives consumers more disposable income.
New-vehicle price hikes have resulted in a booming second-hand market, with the ratio between the sale of new and used cars now standing at 1.75 to 1 compared to 1.25 to 1in 2013.
“The desirability of second hand vehicles are at an all-time high,” says Jeff Osborne, head of Gumtree Automotive. “Owners are opting for [used] vehicles with existing maintenance plans and similar specs to cars they’ve owned in the past or currently own.”
Star Motoring