Johannesburg, 3 Apr. 2012 - With new and used car sales up 16% and 12% respectively, 2011 turned out to be a good year for the automotive industry, according to Mike von Höne, CEO of vehicle risk intelligence company TransUnion Auto Information Solutions.
Addressing motor and associated industry representatives at the biannual TransUnion Auto Trends Forum in Midrand, von Höne noted that the positive trend appeared to be continuing in 2012.
“Looking at first quarter numbers, 2012 has started in a very positive fashion,” von Höne said.
Based on TransUnion’s measurement of a combination of used vehicle financial registrations-obtained from South Africa’s leading vehicle financing institutions; verification enquiry volumes; and growing subscriptions to TransUnion Auto Dealers’ Guide, compared to fourth quarter of 2011, the used vehicle market experienced an increase of approximately 10-12% in the first quarter.
“This compares favourably with increased new vehicle sales volumes of around 7% at the end of February,” von Höne added.
Meanwhile, the rate of decline of used vehicle prices, which had been quite marked during the last quarter of 2011, appeared to be slowing during the first months of this year. “Dealer returns of used vehicle prices reported to TransUnion have been showing stronger sales prices being achieved by dealers. New vehicle price inflation, which had experienced its first significant increase in the last two quarters of 2011, is expected to remain relatively low in 2012.
Given continued Rand strength, TransUnion does not anticipate further significant new vehicle price increases in 2012, with manufacturers continuing to offer attractive deals to support consumer demand.
“TransUnion expects used vehicle price levels and margins to stabilize broadly, in line with the levels achieved in the first quarter of this year,” von Höne added. “The ‘value gap’ between new and used vehicles that opened up briefly through the last quarter of 2011, driven by diverging price level changes, appears to be closing again. Vehicle financial registration data analysed by TransUnion revealed that while the average ratio of new to used vehicles financed had remained relatively steady at around 1.77 (one new vehicle to every 1.77 used vehicles financed), this ratio had widened over the past four months. Now, one new vehicle is being financed for every 1.95 used vehicles financed.
“Market sentiment is steady and volumes are improving with around 40 000 to 45 000 vehicle financing contracts signed every month,” von Höne noted.
Looking ahead to the remainder of 2012, TransUnion expects further steady growth of around 8 to10% in both the new and used vehicle markets as a result of continued recovery of consumer financial health; increased bank appetites to lend money; a continued low interest rate environment; and renewed customer interest driven by ongoing replacement demand and improved sentiment.
However, von Höne cautioned that this scenario could change given the uncertainty and volatility in the global market.
“A further international economic crisis (bought on by renewed sovereign risk worries or perhaps even by conflict in the middle east) could derail current expectations for both business and consumer confidence with negative spill over to the new and used vehicle market.
“Domestically, the recent downward revision of GDP growth expectations to 2.7% in addition to increasing fuel prices, hikes to fuel levies and the introduction of new tolls, may well put a damper on overall growth,” von Höne concluded.
As a global leader in credit information and information management services, TransUnion creates economic and competitive advantages for businesses and consumers. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive solutions that leverage data, advanced analytics and decisioning technology. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in more than 25countries around the world. www.transunion.co.za.
TransUnion Auto Information Solutions is South Africa’s leading provider of information solutions for the automotive industry. The company has built its reputation as the trusted source in vehicle risk intelligence over many decades, producing vehicle values for the motoring and associated industries for 50 years and vehicle verification reports for 30 years.