The used-vehicle market is under pressure as the price gap between new and second-hand cars is narrowing, according to the results of a vehicle pricing index released on Thursday.

TransUnion chief executive Mike von Höne said: “The shortage of quality, late-model used cars on the market, combined with the many excellent ‘deals’ that are available from manufacturers on new cars, has led to declining demand for used vehicles.”

The number of one- and two-year-old models available for resale had dropped, he added, due to a decline in new vehicle sales in 2009 and 2010.

“At the same time, the fall in the rate of new-car inflation, from more than 10 percent in 2009 to less than five percent in 2010 and the first half of 2011, has resulted in a narrowing of the price gap between new and used cars.”

The ratio of used cars to new cars financed dropped from 1.95 used cars for every new car financed in the first quarter of 2011 to 1.63 used cars to every new car in the second quarter.

Nevertheless, the number of used vehicles financed in the second quarter increased 24 percent from the previous quarter.

According to the index, new and used-car inflation lagged consumer price inflation in the second quarter.

The index, which measures the year-on-year price increase of a market-weighted basket of new and used vehicles, shows new car inflation at four percent for the second quarter. This was higher than the 3.7 percent measured in the first quarter.

Used-car inflation slowed from 3.4 percent in the first quarter to 3.1 percent.

“That’s the slowest rate of increase since 2009 - when used-car price deflation was a regular occurrence,” commented Von Höne

Both new and used-car inflation were lower than the consumer price inflation, which was 4.6 percent in May, up from 4.2 percent in April.

Von Höne said the disruption of the Japanese vehicle-manufacturing sector following the earthquakes and tsunami in March had no impact on new-vehicle sales or pricing in South Africa, .

“There have been some delays in the availability of components, which affected local manufacturers’ ability

story courtesy of: www.iol.co.za