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We take a more detailed look at the Motor Trade Sales data published by Statistics South Africa, with a particular focus on new vehicle sales vs used vehicle sales.
It should be noted that Motor trade data published by Statistics South Africa is not adjusted for inflation. So the data is inflated as it contains price increases (aka nominal prices). The story would look a lot worse if the effects of inflation was removed from the data. |
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The blue line graph above shows the total nominal Rand value of total vehicle sales per year from 2007 to 2015. Users should keep in mind that these values include inflation, if inflation was stripped out the total Rand value spent on all vehicles would be represented by the red line. What is clear after inflation is stripped out is the fact that the underlying growth in the total value spent on all vehicles have grown at a much lower rate than the unadjusted figure. Its clear the industry is struggling with the red line turning negative in 2015 when compared to 2014.
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The pie chart to the left shows the contribution of new and used vehicles to total vehicle sales in 2007. New vehicles made up roughly two thirds of the total and used vehicles around one third of the total
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The pie chart to the left shows the contribution of new and used vehicle sales to total vehicle sales for 2016. What is clear is the fact that used vehicles are contributing substantially more to the total so far in 2016 than it did in 2007.
A clear indication that consumers are struggling and more and more consumers are opting to rather buy used vehicles than new vehicles |
Tough economic conditions such as low/no growth, rising interest rates, increasing unemployment, high inflation etc all adding to all ready struggling and indebted consumers long list of woes. And one of the first things struggling consumers cut back on is buying expensive durable goods such as new vehicles. With the trend clearly showing more and more consumers shifting towards used vehicles.