TransUnion Vehicle Pricing IndexREPORT - Q1 2019

Executive SummaryThe TransUnion SA Vehicle Pricing Index (VPI) for new and used vehicle pricing moved to 2.3% and 1.8% in Q1 2019 from 2.3% and 2.9% in Q1 2018 respectively. The VPI in the new passenger market has slowed down below inflation for the seventh consecutive quarter. The used passenger vehicle pricing index has declined in Q1 2019 compared to Q1 2018. The index measures the relationship between the increase in vehicle pricing for new and used vehicles from a basket of passenger vehicles which incorporates 15 top volume manufacturers. Vehicle sales data collated from across the industry was used to create the index.

Although the macro-economic outlook has been positive (with the latest figures showing GDP growth), business confidence has been deteriorating. It is the weakest confidence since Q2 2017 which new vehicle trade has been contributing to.

Total financial agreement volumes in the passenger market have decreased from Q1 2018 to Q1 2019 by 8%.

New and used passenger finance deals has decreased YoY by 10% and 8% respectively. The used-to-new ratio has increased from 2.09 in Q1 2018 to 2.13 in Q1 2019 as predicted. In the used vehicle market, the make-up of used vehicle sales has shown that 35% were under two years old and 10% were demo models which indicates consumers are opting for vehicles that are under two years old. According to Naamsa, there has been a YoY decline of 5.6% in new passenger vehicles for March 2019.

The percentage of cars (new and used) being financed below R200k has moved to 37% which is consistent to the last 3 quarters. This has shown an increase in used car loans has been consistent and currently at around R297k. Although consumers are still opting at value proposition, the prices of baseline new vehicles are above this threshold and have moved into the 200 to 300k band.

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Overall, the South African car market has had another challenging quarter with low business and consumer confidence. New vehicle sales have deteriorated due to current depressed macro-economic environment which has added pressure on household disposable income. The increases in fuel prices and the added hassle of load shedding hampered business activity which decreased demand.

New Pricing Index (Figure 1.1 and 1.2)

New Vehicle price increases have slowed down in Q1 2019. The increases have been marginal from Q4 2018 and Q1 2019 showing that manufacturers are reducing new vehicle prices in real terms.

Used Pricing Index (Figure 1.1 and 1.2)

Used vehicle price increases have also slowed down in Q1 2019 as compared Q1 2018. Used price increases have dropped to 1.8% which is well below the average of 2.9% over the previous 3 years. This is indicative of the shift from used to new as the supply of quality used vehicles are diminishing.

1. Q1 2019 VPI Results

Figure 1.1

Q1 2019

Q1 2018

Q4 2018

NewVPI 2.3% 2.3% 2.4%

UsedVPI 1.8% 2.9% 1.6%

CPI 4.1% 4.7% 5.2%

VPI and CPI

Figure 1.2

Index - New (Rate) Index - Used (Rate) CPI - Base = Jan 2000 (Rate)

15.00%

10.00%

5.00%

0.00%

-5.00%

2009 2010 2011 2012 2013 2014 2015 2016 2017

Q2Q1 Q4Q3 Q2Q1 Q4Q3 Q2Q1 Q4Q3 Q2Q1 Q4Q3 Q2Q1 Q4Q3 Q2Q1 Q4Q3 Q2Q1 Q4Q3 Q2Q1 Q4Q3 Q2Q1 Q4Q3

2018

Q2Q1 Q4Q3 Q2Q1 Q3

2019

Q4

Used-to-New Ratio (Figure 1.3 and 1.4)

The used-to-new ratio is based on finance deals registered in the last quarter. The ratio indicates that finance houses are financing 2.13 used vehicles for every 1 new vehicle. This follows the trend of the VPI where new car prices have slowed down over the last year.

2. Q1 2019 Used-to-New Ratio

Figure 1.3

Figure 1.4

Q1 20192.13

Q1 20182.09

Q4 20182.03

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Used-to-New Ratio

Vehicle Asset Finance (Figure 1.5 and 1.6)

We have seen no shift in the vehicle finance bands over the last four quarters and we expect this trend to continue into 2019.

3. Q1 2019 Vehicle Asset Finance Results<200,000

200,000-300,000

>300,000

Q12019

37%

26%

37%

Figure 1.5

Figure 1.6

0,50

1,00

0

1,50

2,00

2,50

3,00

3,50

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Q2 Q3 Q4

2019

Q3 Q4Q1Q2 Q3

Total

Q2

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 Q3 Q4 Q1 Q2Q1 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2Q3 Q4Q2Q1 Q3 Q4 Q3 Q4

20192012 2013 2014 2015 2016 2017 2018

Manufacturers by Financed Sales Volumes (Figure 1.7 and 1.8)

Toyota and VW have been doing well in both areas sharing the top 2 spots in both new and used sales. Together they have captured more than 45% of the new and used passenger financed volumes.

4. Q1 2019 Top Manufacturers by Sales Volume – Passenger

Figure 1.7 Figure 1.8

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Used Passenger Vehicle Sales New Passenger Vehicle Sales

VOLKSWAGEN TOYOTA FORD HYUNDAI Nissan OTHER TOYOTAVOLKSWAGEN FORD HYUNDAI NISSAN OTHER

Manufacturers by Financed Sales Volumes (Figure 1.9 and 1.10)

Toyota has been doing well in both areas and definitely seems to be the market leader in light commercial vehicles. That said, Ford and Nissan have had another good quarter.

5. Q1 2019 Top Manufacturers by Sales Volume - Light Commercial

Figure 1.9 Figure 1.10

Used Light Commercial Vehicle Sales New Light Commercial Vehicle Sales

TOYOTA NISSAN FORD ISUZU VOLKSWAGEN OTHER TOYOTA NISSAN FORD ISUZU VOLKSWAGEN OTHER

15%

33%

22%18%

7%

5%

18%

26%

21%19%

11%

5%

27% 26%

20%

11%10%

6%

24% 25%

20%

13%

13%

5%

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Sources: Figure 1.1 and 1.2 – Industry Sales Data, Figure 1.3 to 1.10 – New Financed Vehicle Sales Data

TransUnion Auto Information Solutions (TransUnion) obtains information for its analyses from sources, which it considers reliable, but TransUnion does not guarantee the accuracy or completeness of its analyses or any information contained therein. TransUnion makes no warranties, expressed or implied, as to the results obtained by any person or entity from use of its information and analyses, and makes no warranties or merchantability or fitness for a particular purpose. In no event shall TransUnion be liable for indirect or incidental, special or consequential damages, regardless of whether such damages were foreseen or unforeseen. TransUnion shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to its information and analysis.

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