Q3 2024 Industry Insights
South Africa’s Credit Market Shows Signs of Improvement as Vehicle Finance Volumes Increased for the First Time in Two Years
Q3 2024 Report highlights include:
- There has been an increase in consumption-led activity across all major credit products
- Growth in vehicle finance market activity has been observed for the first time in two years, signalling a possible recovery for the vehicle loan market
Consumption credit products (credit cards, personal loans, retail revolving lines) continued to experience growth, with originations growing by 14.4% year-over-year (YoY) in Q3 2024 as consumers find ways to adapt to the persistent high cost of living in South Africa. Retail revolving credit experienced the highest origination growth among all major products, up 21.9% YoY, and average new credit limits assigned rose by 13.3% year over year.
The vehicle finance market has experienced significant slowdown since Q3 2022, given the high cost of vehicles and cost of borrowing pressures. In this context, consumers have preferred to buy used vehicles over new vehicles to manage affordability pressures. This quarter marks a shift in the vehicle finance industry, with a YoY growth of 1.1% in vehicle loans originated – the first quarter of growth observed in two years.
Q3 2024 Metrics for Consumer Credit Products
1Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears
2Inclusive of both bank issued, and non-bank issued personal loans
“As inflation slows and the cost of borrowing declines, there is potential for more consumers who previously only held unsecured credit products to graduate to the next step in their credit journeys by taking out a vehicle loan. As levels of financial inclusion improve and more underserved consumers are able to secure vehicle and other loans, lenders have a real opportunity to create greater loyalty as well as improve credit education efforts. Putting consumers’ needs first will ensure better credit management and a healthier economy.”
- Lee Naik, CEO of TransUnion Africa
About the South Africa Industry Insights Report
TransUnion’s quarterly South Africa Industry Insights Report provides in-depth, statistical information drawn from its national consumer credit database, aggregated across virtually every active credit file on record. Each file contains hundreds of credit variables that illustrate consumer credit usage and performance. Entities across industries can subscribe to and leverage the Industry Insights Report to analyse market dynamics throughout an entire business cycle, helping them understand consumer behaviour over time.
The report looks at major consumer lending categories: credit cards, personal loans, home loans, vehicle and asset finance (VAF), and clothing, focusing primarily on three dimensions across these categories: originations (new accounts opened), balances (outstanding total and average lending balances) and delinquencies (accounts in payment arrears).Businesses can access more details about and subscribe to the Industry Insights Report. The South Africa Industry Insights Report looks at major consumer lending categories: credit cards, personal loans, home loans, vehicle and asset finance (VAF), and clothing. The report primarily focuses on three dimensions across these categories: originations (new accounts opened), balances (outstanding total and average lending balances) and delinquencies (accounts in payment arrears).
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