What this does not consider is the shrinking disposable income allowing individuals to buy these vehicles.
For example: increased overall taxes (fuel levi, e-tolls, payroll tax, VAT etc etc) over the last 20 years, above inflation increases in things like electricity, food and "luxury" items such as toiletries and cleaning products.
Fair point, but interest rates are significantly lower than what we had 20 years ago (14% back then, I think).
Most people look at the monthly installments and not the full vehicle price (or full cost of finance), so with Prime at half of what it was 20 years ago AND with balloon/residual financing now available up to 72 months (while 20 years ago, you needed minimum 10% deposit, no balloon and max term of 60 months), the realised hit in monthly installments is actually quite small.
I did the calculation below. The annualised increase in installments is effectively only 4.2% (using the no deposit and 40% balloon tricks of today, which were not available to normal non-business bank clients back in 2001).
Granted, anyone who looks at just the installment affordability and not the full finance amount is extremely short-sighted (which accounts for 90% of the new car buying market!). However, this analysis gives a peek as to why the increase in retail prices has not translated into an equivalent increase in installment amounts.
| 2001 | 2021 | Average annualised growth |
| Car | 330i | M340i | |
| base price | 271,000 | 1,139,216 | 7,4% |
| term months | 60 | 72 | |
| balloon | 0 | 40% | |
| Prime rate | 14% | 7% | |
| installment | R6,305.70 | R14,311.67 | 4,2% |
