The latest TransUnion Vehicle Pricing Index (VPI) contains a number of small, but significant indications that the tide may at last be turning for the beleaguered used car industry.

For the third successive quarter, used car inflation has increased on a year-on-year basis, rising by 1.58% between the third quarter last year and the third quarter 2014. 

From 2012 to 2013, the used car market experienced five straight quarters of year-on-year price deflation.

However, used car inflation paled against the rise seen in new car prices, which outpaced consumer inflation for the fourth consecutive quarter.

At 7.82% in the third quarter, the year-on-year increase in new car inflation reached levels last seen at the height of the financial crisis in 2009, when it reached 10.6% for the year.

Despite the move in used car pricing, TransUnion Auto Information Solutions CEO Keith Dye warns that a slight slowing in the new car price inflationary trend in August and September could indicate that the used car industry may not be out of the woods just yet.

“The rate of increase in new car price inflation slowed in the last two months after reaching a high of 7.97% in July, after rising consistently for 13 months,” he notes.

“If new car price inflation continues to slow, the current swing back in favour of used cars could slow or reverse.”

According to TransUnion’s records of financial registrations, the trend towards the purchasing of used rather than new vehicles, which emerged in the first quarter of 2014, continued into the third quarter.

The ratio of used to new vehicles touched 1.80 to 1 in the current quarter, up from 1.67 in the second quarter; 1.53 in the first quarter, and 1.25 at the end of 2013.

“With pressure on consumers continuing unabated in the face of rising interest rates and hefty hikes in water and electricity tariffs, demand for both new and used vehicles is likely to remain muted for the foreseeable future,” says Dye.

TransUnion publishes the VPI on a quarterly basis. The vehicle risk intelligence company calculates the VPI from data it receives on monthly sales returns from thousands of dealers throughout the country, as well as vehicle financing registrations from all of the major banks and vehicle finance houses.