TransUnion’s latest Industry Insights Report indicates that the average new vehicle loan amount in South Africa stood at R395,292 in the second quarter of this year, up 7% year-on-year.
This rise in loan amounts is a direct response to the escalating costs of new vehicles, which rose at an average rate of 6.7% during the same time, the company’s Vehicle Pricing Index revealed.
Consequently, outstanding balances in the vehicle asset finance sector grew by 5.5% annually, indicating that while fewer consumers may be entering the market, those who do are taking on larger loans, said TransUnion.
Supporting this statement is the fact that the vehicle asset finance market experienced its third consecutive quarterly decline year over year, dropping by 4.5% to 117,000 new entrants coming into the market in Q2 2023.
In a positive development, serious delinquency rates in the sector showed a significant improvement, decreasing by 160 basis points year over year.
“This trend suggests consumers are placing a higher priority on repaying their secured loans, likely to maintain uninterrupted access to their vehicles as essential mobility solutions,” said TransUnion.
“This improvement in delinquency rates may reflect a heightened sense of financial responsibility among borrowers, even as they take on more significant loan amounts.”
What’s available for R400,000
Looking at South Africa’s best-selling vehicles for August, there is a significant overlap between the average new loan amount and the most popular cars on the market.
Nameplates that feature both on the best-sellers list and have models that are available for in and around the R400,000 mark include:
- Chery Tiggo 4 Pro
- Haval Jolion
- Hyundai Venue
- Kia Sonet
- Mahindra Pik Up
- Toyota Corolla Cross
- VW Polo
Naturally, there are cheaper cars like the Suzuki Swift and VW Polo Vivo that cost far below this price point but still perform well every month, as well as more expensive ones like the Ford Ranger and Toyota Fortuner.
However, a good portion of August’s top sellers are priced close to, if not at R400,000, with crossovers being the most prominent body style in this category, hinting that South Africans are very fond of their competitively-priced mini-SUVs.
Keyword: How much the average South African spends on a new car – and what’s available at this price