transunion vehicle pricing index q3 2021

Executive SummaryThe TransUnion SA Vehicle Pricing Index (VPI) for new and used vehicles moved from 7.6% and 2.3% in Q3 2020 to 3.8% and 5.9% in Q3 2021, respectively. The VPI increase in the used passenger market surpassed new vehicle pricing. The index measures the relationship between the increase in vehicle pricing for new and used vehicles from a basket of passenger vehicles incorporating 15 top volume manufacturers. We used vehicle sales data collated from across the industry to create the index.

Macro Outlook The macroeconomic outlook improved dramatically; the latest figures showing annualised positive GDP growth of 19.3% in Q2 2021 compared with -3.2% in 2021. Although it’s beaten market forecasts of 17.5%, it’s off a low base. Consumer confidence remains below 0 as throughout 2020 and 2021, with business confidence deteriorating from last quarter highs. Household debt to income remains high, adding significant pressure on disposable income. The volatile exchange rate against the dollar over the quarter makes forecasting OEM imported parts difficult.

Vehicle Sales Total financial agreement volumes in the passenger market increased by 5% from Q3 2020 to Q3 2021. New passenger finance deals increased YoY by 8%, and used passenger deals increased 11%. This is positive given the disruptions South African businesses experienced during the civil unrest. The used-to-new ratio has

increased YoY from 2.35 in Q3 2020 to 2.4 in Q3 2021. The makeup of used vehicle sales shows 35% are under two years old, which has been slowly decreasing as quality used vehicle supply remains under strain. In Q3 2021, demo models financed made up 6% of used financed deals, indicating consumers are opting for older vehicles as quality supply diminishes and pressure on disposable income increases.

According to Naamsa, there has been a 26% YoY increase in new passenger vehicles for Q3 2021 vs. Q3 2020. The export market has been resilient through the pandemic (apart from a significant dip in Sept.). Total exports have increased by 23% YoY from 2020 to 2021, with continued growth dependent on global restrictions.

Consumer Buying Trends The percentage of new and used cars financed below R200,000, R200,000 to R300,000 and over R300,000 saw YoY movement of 5% for Q3 2021 — from under R200,000 into the over R300,000 bracket. The lower sales volumes show consumer ability to purchase more expensive vehicles is strained. We expect this to continue as used vehicle prices increase in real terms.

Consumer buying patterns indicated more than 70% of total new and used financed vehicles are hatchbacks and SUVs. Almost half are financed by consumers aged between 26 and 40, with a larger percentage in used. New SUVs financed made up 32% of all new vehicles financed, indicating consumers are looking for practicality.

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TransUnion Vehicle Pricing Index Q3 2021

Q3 2021

Q3 2020

Q2 2021

New VPI 3.8% 7.6% 6.1%

Used VPI 5.9% 2.3% 4.9%

CPI 4.9% 3.1% 5.2%

New Price Index (Figure 1.1 and 1.2) New vehicle price increases are below inflation, although this is forecast to increase in the upcoming months.

Used Price Index (Figure 1.1 and 1.2) Used vehicle price increases drastically as used quality vehicle supply dries up.

1. Q3 2021 VPI Results

Figure 1.1

Figure 1.2

Market Analysis (Consumer Affordability) The push for quality used vehicles and their limited supply is clear in used vehicle prices overtaking those of new vehicles. The used VPI has been high by South African standards. The strain on quality used cars will continue until prices become too expensive relative to new vehicles. We’re in a market where new vehicle supply and quality used vehicles are in short supply, and consumers are looking for the best value for money. The prices are not likely to lose strength anytime soon as consumers take advantage of low interest rates.

Summary Although lockdown restrictions have eased, overall, the global automotive industry had another challenging quarter with civil unrest and supply disruptions. The South African vehicle market faces further challenges with political unrest seeing burnt dealerships and the looting of stores. Current uncertainties include COVID-19 vaccine roll-out, the lack of quality used vehicle supply, chip shortages leading to low new vehicle supply, political unrest, unemployment rate increases, negative exchange impact and further pressure on disposable income.


Vehicle Pricing Index (VPI) and Consumer Price Index (CPI)

2021

Index - New (Rate) Index - Used (Rate) CPI - Base = Jan 2000 (Rate)

-5%

0%

5%

10%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Q3 202171,316

Q3 202080,716

Q2 202175,206

NAAMSA NEW VEHICLES

Used-to-New Ratio (Figure 1.3 to 1.5) The ratio indicates finance houses are financing 2.4 used vehicles for every 1 new vehicle, which should continue to increase in the upcoming quarters.

2. Q3 2021 Used-to-New Ratio

Figure 1.3 Figure 1.4

Used-to-New Ratio

Q3 2021

Q3 2020

Q2 2021

New vehicles 32,814 34,559 35,246

Used vehicles 78,950 73,518 81,340

Ratio 2.41 2.13 2.31

Figure 1.5


1,00

3,00

2, 50

2,00

1,50

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total

2021

0%10%20%30%40%50%60%70%80%90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Vehicle Asset Finance Bands

<R200,000 R200,000-R300,000

Q3

>R300,000

Vehicle Asset Finance (Figure 1.6 to 1.7) The over R300k band has remained highest since we started tracking in 2011 — a positive sign going into the next quarter, albeit at lower volumes.

3. Q3 2021 Vehicle Asset Finance Results

<R200,000

R200,000-R300,000

>R300,000

Figure 1.7

Figure 1.6

Q32021

28%

28%

44% Q32020

29%

28%

39% Q22021

29%

28%

43%

0%10%20%30%40%50%60%70%80%90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Vehicle Asset Finance Bands

<R200,000 R200,000-R300,000

Q3

>R300,000


Manufacturers by Financed Sales Volumes (Figure 1.8) Toyota and VW have done well in both areas sharing the top two spots in new and used; although Renault, Hyundai and Suzuki had a great quarter alongside VW in new passenger vehicles.

Manufacturers by Financed Sales Volumes (Figure 1.9) Toyota had an exceptional quarter in new LCV finance, capturing 45%. Toyota and Ford dominated the used market — capturing close to 60% of financed LCVs.

4. Q3 2021 Top Manufacturers by Sales Volume – Passenger

Figure 1.8

New Passenger Vehicle Sales

5. Q3 2021 Top Manufacturers by Sales Volume - Light Commercial

Figure 1.9

Used Light Commercial Vehicle Sales New Light Commercial Vehicle Sales

TOYOTA NISSANFORD ISUZU VOLKSWAGEN OTHER

VOLKSWAGEN TOYOTA FORD OTHERHYUNDAI MERCEDES-BENZ

Used Passenger Vehicle Sales

OTHERVOLKSWAGEN TOYOTA HYUNDAIRENAULT SUZUKI

TOYOTA NISSANFORD ISUZU VOLKSWAGEN OTHER


24%

15%

10%7%6%

38%

21%

30%

28%9%

6%

6%

45%

9%

22%

18%

3%3%13%

31%

26%

15%

8%

7%

Body Type by Financed Sales Volumes (Figure 1.10) Hatchback and SUV make up more than 70% of all vehicles financed in Q3 2021.

Age Band by Financed Sales Volumes (Figure 1.11) Almost half of vehicles in Q3 2021 were financed by those aged between 26 and 40.

6. Q3 2021 - Popular Body Types

Figure 1.10

New Passenger Vehicle Sales

7. Q3 2021 - Who are Financing Vehicles

Figure 1.11

Used Passenger Vehicle Sales New Passenger Vehicle Sales

Used Passenger Vehicle Sales


New

Under 25 26-40 41-55 Over 55

New

Coupe HatchBack Multi-Purpose vehicle

Sedan SAV SUV

Cross over Other

cOUPE multi-purpose vehicleHATCH BACK SEDAN

sav suv OTHERCROSSOVER

under 25 26-40 41-55 OVER 55 under 25 26-40 41-55 OVER 55

cOUPE multi-purpose vehicleHATCH BACK SEDAN

sav suv OTHERCROSSOVER

46%

Used

Coupe Hatch Back Multi-Purpose vehicle

Sedan SAV SUV

Cross over Other

2%

45%

2%

17%

1%

26%

2%3%

3%4%4%

10%

32%

6%

52%33%

Used

Under 25 26-40 41-55 Over 55

5%

48%35%

12% 9%

TransUnion SA Vehicle Pricing Index queries can be directed to: Michelle van Renen | [email protected] or +27 11 214 6000

Contact us

Sources: Figure 1.1 and 1.2 - Industry Sales Data, Figure 1.3 to 1.11 - New Financed Vehicle Sales Data

TransUnion Auto Information Solutions (TransUnion) obtains information for its analyses from sources, which it considers reliable, but TransUnion does not guarantee the accuracy or completeness of its analyses or any information contained therein. TransUnion makes no warranties, expressed or implied, as to the results obtained by any person or entity from use of its information and analyses, and makes no warranties or merchantability or fitness for a particular purpose. In no event shall TransUnion be liable for indirect or incidental, special or consequential damages, regardless of whether such damages were foreseen or unforeseen. TransUnion shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to its information and analysis.

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transunion vehicle pricing index q3 2021

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