Auto trade set for flat year

2013-01-23 00:00

TRADING conditions in the used passenger vehicle market will remain flat in 2013, says a key industry expert.

TransUnion Auto senior vice president Mike von Höne told The Witness that the recent depreciation in vehicle prices would stabilise this year.

The TransUnion Vehicle Pricing Index (VPI) says used passenger vehicle price inflation “dipped into negative territory for the first time in three years” in the final quarter of 2012.

While TransUnion’s new and used vehicle inflation came in at 2,2% in 2012, used vehicle inflation slid to -0,1% in the final quarter of last year, compared with 3,6%, 2,9% and 2,3% in the first, second and third quarters respectively.

“We don’t expect massive depreciation in the used vehicle market. We see it as more or less stable,” said Von Höne.

“We don’t see levels to continue going downwards. We expect the same levels of demand for used vehicles.”

The industry has been expecting new vehicle prices to rise in 2013 on the back of the recent weakness of the rand.

Von Höne said this would assist the used vehicle market, both in terms of prices and sales.

However, he still expects the new vehicle market, which has performed well over the past two years, to increase sales volumes by between three and five percent this year.

“I don’t think that people are buying down to the extent that they did during the recession a few years back. Cars are still a necessity in South Africa. Many already have smaller cars after buying down.”

Although the used vehicle segment had faced stiff competition from the new vehicle segment in recent years, Von Höne said, most dealerships remained on a good footing.

“The fallout experienced by used vehicle dealerships, with many closing down a few years ago, has not continued. Things have stabilised and they have found viability. The secret for used dealerships is to make sure that they buy for the right price … and that they buy for their market.”

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