The ratio of young people buying cars in South Africa has dropped dramatically in the past decade, according to data analytics company Lightstone.
In 2012, consumers aged below 35 years accounted for 39% of new car purchases but by 2022 the figure had dropped to 31%. For used cars, the proportion of young buyers dropped less sharply from 41% to 39% over the same period, according to Lightstone’s study.
Commenting on the figures, WesBank said the decline in young consumers buying new cars compared to a decade ago can be attributed to several reasons.
“Rapidly rising vehicle prices, more young people staying closer to work combined with hybrid working models, and the availability of e-hailing services all play a role in this trend. It’s likely a combination of these factors that is influencing their decision-making,” said Lebo Gaoaketse, head of marketing and communications at WesBank.
TransUnion Africa believes many younger and urban consumers don’t want to own cars but simply want to get from A to B.
In South Africa we have all the elements we need for alternative ownership models like subscription. Think affordable, long-term, flexible car hire
— TransUnion Africa
It said in Europe and more developed economies, ride hailing and ride sharing have practically become the norm and they’re a rapidly emerging trend in South Africa, albeit largely in the major urban centres for now.
“While financed vehicles will remain relevant for the foreseeable future, the real opportunity for the automotive industry lies in creating alternative mobility models in line with the global trend of mobility as a service,” said a TransUnion spokesperson.
“In South Africa we have all the elements we need for alternative ownership models like subscription. Think affordable, long-term, flexible car hire. We have the demand, the huge market of people who want to be mobile. We have the supply, namely a large stock of vehicles standing idle at dealerships and vehicles that don’t move don’t bring in money.”
Weihan Sun, TransUnion’s director for financial services research and consulting, said young consumers are more financially literate than some older consumers and more wary of taking on credit.
Quoted in Business Times recently, he said most young people today are more aware of their financial obligations than the previous generations because of the amount of information available online.
“They are more conscious to say, 'If I do not meet my financial obligations, how is it going to affect my long-term credit when I need to apply for a home loan?'”
According to the Lightstone study, Volkswagen’s popularity has grown over the past five years and is the youth’s most popular choice at just more than 25% market share. Ford and Suzuki are also growing, said Jaco van Staden, head of Sales at Lightstone Auto.
“The big winner in the vehicle segment is the crossover, which has climbed from about 3% in 2012 to just under 15% in 2022. SUVs and above one-ton double cabs have also grown in popularity, while small and medium passenger vehicles have been the big losers,” he said.
Despite the declining ratio of young car buyers, South Africa’s domestic new vehicle sales have exceeded expectations. In the first six months of 2023, new vehicle sales of 265,824 units were 4.8% ahead of the same period in 2022. Car sales shrank 1.3% but light commercials were 20.3% ahead.
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