European and US car brands have lost ground to Asian competitors in SA’s new and used vehicle markets since the start of the Covid-19 pandemic, as cash-strapped consumers seek to reduce their debt burden, a study by Absa Vehicle and Asset Finance suggests.
In the first quarter of 2022, European and US brands saw their share of the used-vehicle market shrink to 59% from 62% in 2019, before Covid-19 hit. The drop was more pronounced in the new-vehicle market, from 45% to 37%.
Japanese and South Korean brands took up much of the slack for a combined 55% share of the new market, but Indian and Chinese brands are also strengthening their market grip.
The study says consumer sentiment is moving away from “high-ticket Europe/US vehicles” to cheaper alternatives.
Vehicle price inflation since 2019 is reflected in Absa credit finance applications. In the first quarter of 2019, 28% of new-vehicle applications were in the R100,000-R200,000 range. In 2022, there are so few vehicles there that their share plunged to 13%. That is barely half the 24% enjoyed by vehicles priced between R400,000 and R600,000. The most popular range is R200,000-R300,000, with 35% of applications.
In the used market, vehicles costing R100,000-R200,000 snared more than 50% of Absa applications in 2019. Now their share is 38%. The R200,000-R300,000 bracket, now 32%, is likely to take the lead soon.
At the top end, Japanese and South Korean brands are making a big statement. In 2019, their share of the used-vehicle market of more than R500,000 was less than 0.5%. Now it’s 6%. That is partly down to price inflation but also due to Asian vehicles crashing the perception barrier that says the only expensive vehicles worth buying are US or European.
There is also a big shift in the age of used vehicles that consumers want to buy. In 2019, vehicles up to five years old made up 71% of applications. Now the share is 64%. The main reason is that there is a shortage of “young” used vehicles.
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