Deloitte reveals key drivers to vehicle purchase intent in South Africa

Deloitte has released its latest VPI (Vehicle Purchase Intent) index for South Africa, which analyzes South African citizens’ interest in purchasing new vehicles. At the end of February 2023, the figure was down more than 12% on 2021. 

Similar to other countries, consumers in the country are putting off large purchases, such as cars, because of rising costs and turbulent economic times. Most people are prioritizing savings to sustain their standard of living in the face of the climbing cost of living. 

However, those who are keen to purchase new vehicles are doing so to get their hands of emerging technological features and the promise of reduced operating costs from new electric vehicles (EVs). This is a different buying rationale that could help offset declining VPI. 

Key Factors influencing VPI on the positive side: 

• the improving supply of new vehicles as the semiconductor crisis is easing
• the stabilization of vehicle prices
• underlying pent-up demand created by the prolonged long lead times for new vehicles
• increasing consumer interest in new technologies, including EVs, and the desire to reduce running costs
• the aging vehicles fleet in South Africa needs to be renewed

Key Factors influencing VPI negatively: 

• consumer concern over high inflation and total cost of vehicle ownership
• a lack of affordable vehicle options at the lower end of the market as many OEMs have raised entry-level pricing
• the lingering impact of stock shortages that is making both new and used cars more expensive
• geopolitical instability, trade tensions, and global supply chain disruptions that are affecting input costs

Of those consumers willing to purchase new vehicles, 41% are motivated to make an EV their next car purchase, 23% want the new features a new vehicle will come with, 22% said they are just ready to drive something new and 15% said their current vehicle’s maintenance costs are not worth keeping it. 

However, consumer concerns that stop them from purchasing a new vehicle include meeting upcoming payments (24%), the amount of money they have saved (68%), credit card debt they are carrying (39%), and delaying large purchases (51%). Although the upcoming payments figure is down, the rest are up from the last time the research was carried out. 

Other figures of interest are the average daily driving distance in South Africa is 50km. 23% of drivers plan to drive more in the future, the average number of days South Africans work from home is 3.1, and 21% would prefer to purchase their vehicle online.