MIWA director Paul Britz is upbeat but warns members to be cautious in their dealings.The Vehicle Pricing Index (VPI) by TransUnion Auto Information Solutions is published quarterly and measures the year-on-year price inflation of a market weighted basket of new and used vehicles.
The latest figures released show that the pendulum started to swing back in favour of used vehicle sales in the last quarter of 2011 as used vehicle price inflation dropped to its lowest level in two years (0.7 per cent ) while new car price inflation rose to 4.0 per cent, an increase of more than 2.0 per cent over the previous quarter. Annual new vehicle price inflation for 2011 dropped to 3.4 per cent (2010: 4.7 per cent), while used car inflation fell to 2.7 per cent (2010: 4.4 per cent) for the 12 months ending in December.
Based on TransUnion’s new and used financial registration statistics obtained from South Africa’s major vehicle financing institutions, the ratio of new to used vehicle sales swung back in favour of used cars as the year drew to a close. After hovering around the 1.6 used vehicles for every one new vehicle financed (1.6:1) mark for most of the year, the ratio of used to new cars financed widened to 1.92 and 1.93 in November and December, respectively.
TransUnion Auto CEO Mike von Höne said highly competitive deals on new vehicles available to consumers during the year resulted in new car price inflation dropping to 1.8 per cent in the third quarter. Fewer of these deals now appear to be available. “Most manufacturers introduced price increases in the last few months of the year on the back of bumper sales of new vehicles throughout the year. This has resulted in quite a significant increase in new car prices – a trend which could well continue into 2012,” von Höne added.
Looking ahead to 2012, von Höne said the momentum of the recovery in the new vehicle market could be undermined if inflationary pressures forced the Reserve Bank to increase interest rates in the coming months. “However, should the repo rate remain unchanged for longer and the Rand maintain its current position – thus allowing manufacturers to avoid significant price increases – the overall vehicle market will benefit,” von Höne concluded.
Commenting on these figures, MIWA’s director Paul Britz said, “MIWA welcomes the increase in used vehicle sales as it means more work for MIWA members, which, in turn, should strengthen their financial position. Workshops have taken a big knock over the past couple of years and it is only recently that there has been an increase in service sales.
“However, with this increase in business, members should be wary of taking on specialised work on vehicles for which they do not have the technical service information, just to not lose the business. If something does go wrong, they could be burned,” Britz warns. “Members should have the expertise and information before they take on a job.”
Sidebar: Warranty warning
MIWA has been recently approached by a number of recently established companies that started or want to start selling extended service plans and warranties. This is not only dangerous for our members because they might never get payment after they got the go ahead to service a vehicle from the company who holds its warranty. Consumers might also be bitten because they will think they are covered but the company may not fulfill its side of the contract. MIWA members and the general public should check how long a company has been in existence and who is the underwriter before doing business with a new company.