Car sales gain traction

Car prices are not expected to increase as much this year as they did in 2014.

"We should see the preowned and used car market showing strong performance," said Standard Bank head of vehicle and asset finance, Nicholas Nkosi.

Passenger vehicle sales in January were up 1.65% on December, but were marginally lower than a year ago, statistics released by the Department of Trade and Industry showed yesterday.

Nkosi cautioned against reading too much into the month-on-month sales from December to January because the numbers are volatile at this time of the year.

Standard Bank's own statistics show the average deal size increased by more than 18% over the year to nearly R315000 as car prices were affected by the rand's slide against major currencies.

So, those looking for new wheels could see some reprieve this year.

"New vehicle sales will remain at current levels given the exchange rate," said Nkosi.

Last year's rising prices and the effect of two interest rate increases left a mark on car buyers.

Standard Bank's customers now take longer to pay off their vehicle purchases.

According to Nkosi, the average contract term increased from 65.7 months a year ago to 68 months in January.

Reserve Bank governor Lesetja Kganyago last week gave consumers a breather by again by leaving the interest rate unchanged.

Credit and information management company TransUnion's consumer credit index showed last month that consumers might finally be turning the corner.

For the first time in three years the index edged to above 50 points - indicating an improvement in credit health.

TransUnion said that households' cash flow remained under pressure, despite some improvement as a result of lower inflation and cheaper fuel.

Volkswagen was the biggest seller of passenger vehicles, flogging nearly 7800 in January, followed by Toyota with 6741.