In Q2 2024, used car prices in South Africa rose slightly by 0.6%, lagging behind the general inflation rate of 5.2%. Meanwhile, new car prices increased by 4.4%, driving a notable shift toward the used car market. The financed used-to-new vehicle ratio improved from 1.15 in Q1 to 1.44 in Q2, showing that for every new car financed, 1.44 used cars were purchased. These findings are detailed in TransUnion’s latest Vehicle Pricing Index (VPI) report, which analyzes trends in automotive pricing and financing across South Africa.
Economic Pressures and Financing Shifts
Vehicle Asset Finance (VAF) performance declined in Q2 2024, marking the fifth consecutive quarter of annual decreases in new VAF accounts. The total number of active VAF accounts has leveled off at 2.1 million, the lowest in four years. Despite this, the total value of VAF balances rose by 16%, reflecting higher interest rates and rising vehicle costs.
Between April and June 2024, the average loan amount for a new car rose from R391,000 to R400,000. Only 17% of VAF accounts are for cars under R200,000, while 28% fall in the R200,000-R300,000 range, and 55% exceed R300,000.
According to Marcia Mayaba, Sales VP at TransUnion Auto Information Services:
“The earlier momentum from low interest rates has faded, making it harder for the industry to attract new financing customers, especially for new vehicles. However, consistent delinquency rates show that existing customers are managing payments well, despite economic challenges.”
Changing Consumer Demographics in Vehicle Financing
Recent VAF data highlights an increasing number of younger consumers in vehicle financing. Gen Z (born 1997-2012) accounted for 10.9% of new VAF agreements in Q2 2024, up from 7.9% in Q2 2023, while Baby Boomers' share decreased from 8.3% to 7%. Millennials (born 1981-1996) remain the largest segment, making up 40% of new vehicle purchases.
This demographic shift suggests a demand for more flexible, digital-first financing options, along with a growing interest in electric vehicles (EVs) as sustainability concerns resonate with younger consumers. TransUnion foresees a significant opportunity for EV adoption in South Africa, anticipating that interest will accelerate as eco-conscious consumers seek affordable EV models and tailored financing solutions.
