South African new car sales were at the higher end of expectations in August, with a substantial "buy-ahead" by consumers seeking to avoid the new car emissions tax, which came into effect on 1 September.
The increase in car prices resulting from the emissions tax will average between two percent and three percent, Absa Vehicle and Asset Finance said on Thursday.
Earlier, the National Association of Automobile Manufacturers of South Africa (Naamsa) said that August 2010 new car sales, at 33 541 units, reflected an improvement of 11 128 cars or 49.6% compared to the 22 413 new cars sold by the industry during August 2009.
Absa managing executive Sydney Soundy said the commercial bank had received 9.4% more applications in August than in July.
Customers applying for finance
The number of vehicles Absa financed in August was the same as in July, however this was 54% higher when compared to August 2009.
Soundy said the quality of customers applying for finance had remained at similar levels to those of the previous month.
The average length of contracts applied for was 60 months, from 56 months a year ago, while 48% of applications received were for contract terms of over 60 months.
"The applications for longer term contracts may be indicative of the customers' need to finance higher ticket values than they would otherwise afford under shorter contract periods."
He said the average length that an account remained in Absa's books had also increased from 40 months last year to the current average of 45 months.
Applications without deposit
Applications without deposit were just over 50% of all applications received.
"The average financed value per vehicle has increased to around R207 000, representing an increase of approximately 28% from the same time last year."
Soundy said this was a result of vehicle price inflation, lesser deposits paid on financed deals, and customers opting for longer contract periods as a way to improve affordability of instalments on bigger ticket values.
"The shift from new vehicles to good quality pre-owned vehicles continues to reverse from the ratio experienced at the beginning of this year.
"Then, the ratio of used to new vehicles was at 2.14 to 1."
Soundy said that, as at the end of August 2010, this ratio had changed to 1.54 to 1.
The reason for this could be attributed to a reduction in the price gap between good quality used cars compared with new vehicle prices as used car prices had increased.
"In this regard, we experienced an increase of three percent on the average ticket value of the financed amounts on used cars and we are also seeing signs that the stock levels on used cars are improving."
Sapa
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