The latest Vehicle Price Index (VPI) report released by TransUnion, a trusted provider of global information solutions for assessing and managing risk, shows the effect of continued economic pressure on the pockets of consumers.
Used car price inflation showed an increase of 2.41% in Q2 2015, up from 0.58% on a year-on-year basis, while new car price inflation has softened from 7.01% to 5.35% in Q2 2015. This trend highlights the increasing demand for used cars and is further evidenced by the ratio of new to use vehicles financed. The vehicle financial registration data analysed by TransUnion revealed that the ratio of new to used vehicles financed has widened from 1.65 (one new vehicle to every 1.65 used vehicles financed) to 1.78 on a year-on-year basis.
“Price inflation on used cars typically tracks price inflation of new cars, a trend that has remained consistent over the past few quarters. However, in the current quarter, this trend has changed and pricing is beginning to converge. Typically this means that new car price inflation is softening, or increasing at a lesser rate, while the price inflation of used cars is increasing at an accelerated pace. The last time this trend was observed was in the third quarter of 2013. It is clearly indicative of reduced consumer confidence and buying power as a result of on-going economic pressure,” says Kriben Reddy, Director Product Development at TransUnion Auto Information Solutions.
According to the latest Bureau for Economic Research Consumer Confidence Index, consumer confidence is at