New car prices continue to rise in South Africa

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Andrew Hibbert, auto data analyst and team lead at Lightstone, said the April 2024 number was also lower than the March year-on-year increase of 5.2%. On a monthly basis, April prices climbed 0.9% from March, which in turn was 1% down on February.

“Over the first four months of 2024, New Vehicle price inflation grew by 5.4% compared to the same period in 2023, matching the increase in Headline CPI for the same period”, he said.

New vehicle price inflation in 2023 grew at an annual average of 6.2%, which was a significant jump on the 4.6% rise seen in 2022, but reasonably similar to the 6% rise in Headline CPI in 2023.

“The projected outlook for new vehicle price inflation for 2024 is 5%, close to the likely Headline CPI average of 5.1%”, Hibbert said.

Used passenger vehicle inflation y-o-y for two-year-old vehicles (see graph below) was -1.9% at the end of April (meaning, on average, a two-year-old passenger car was retaining 1.9% less of its original value in April 2024 than it was in April 2023). This is marginally lower than in March 2024 (-1.8%), and quite a bit lower than in April 2023 (+1.9%).

For four-year-old vehicles, inflation was running at -2.8% y-o-y in April, versus -2.5% in March and +3.4% in April last year, while for six-year-old Passenger Vehicles, April’s inflation was -2.6%, compared to -2.4% in March 2024 and +4.5% in April 2023.

Hibbert said (graph below) new vehicle inflation and Used Vehicle inflation over the last three years generally trended in opposite directions.

“As new light vehicle inflation declined through 2021 and into 2022, and New Vehicle sales struggled to recover from the Covid-induced slump, Used Vehicle sales were on the rise, and the increased demand drove the price inflation for these vehicles higher.”

Interestingly, Hibbert said the trend cycle for the ratio of used to new financed vehicle sales appeared to roughly mirror the trend cycle for New Light Vehicle Price inflation. “This makes sense, as the more slowly new vehicle prices are increasing, the more attractive new vehicles become to prospective consumers and the gap between the number of used cars being sold vs the number of new cars narrows,” he said.