May Vehicle Sales - 7 used cars are sold for every 5 new cars bought
With higher fuel costs, a weak exchange rate, and price inflation for new cars, consumer spending power has been negatively affected.
Consumers are less likely to splash out on luxuries, and this is seen in the decrease in the number of new car applications, which is down 7% compared to last year. Instead, consumers are looking at buying used cars – data shows than two used car finance applications are received for every one new car finance application.
“Over the last few months we’ve seen a rise in the overall cost of mobility. Fuel prices have increased 18% since the start of the year as a result of a weaker rand, and the Reserve Bank has warned of interest rate hikes in the coming months,” said Rudolf Mahoney, Head of Research at WesBank.
“Factors such as these will continue to affect consumer confidence and put household budgets under even more pressure. For many consumers buying a new car may not be a priority in the immediate future.”
A new car is 7.6% more expensive than last year, this why consumers are opting to buy pre-owned cars. The used-to-new ratio is highest it’s ever been since January 2012, with 7 used cars sold to every 5 new cars. Consumers need to buckle down on their budgets.
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