Looking for a 'new car'? The used vehicle market is trending

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The local economy might be frail, yet National Association of Automobile Manufacturers of South Africa (Naamsa) still reports car sales figures in the thousands.

However, it's only a small reflection of the rest of the population's financial affairs. 

'Lowest in five years'

The used-car market is offering extraordinary value for buyers at the moment. The latest data from Transunion shows that previously owned vehicle price increases went from 2.5% in the first quarter of 2019 to only 1% in Q2. That’s the lowest recorded quarterly increase in five years and well below the current official inflation rate of 4.5%.

The same data shows that the ratio of new cars sold to previously-owned in SA has risen from 2.05 to 2.16 – this means the volumes in the used car market are well over double that of new vehicles.

The grim macro-economic climate – with GDP declining, unemployment increasing and consumer confidence remaining low - is obviously driving the hunt for value among SA car buyers.

Fewer purchasers are prepared to invest at the moment in a new vehicle which will lose a significant amount of resale value the minute it’s driven off the showroom floor, especially when the Transunion data shows that new vehicle prices rose by 3% in Q2.

READ: 'Can you fit a coffin in this Ford?' - 10 weird but funny questions by used-car buyers

                                 Image: iStock

A better deal

But if they won’t buy new, SA car buyers are doing the next best thing - 40% of used car purchases registered by Transunion are for vehicles under two years old or are demo models. An important component of these sales for purchasers is getting the security and value of a decent maintenance or service plan as part of the deal.

Gumtree Autos sales data indicates that used car buyers currently are seeking safe havens in reliable, well-known brands. This is not an environment to encourage adventurous or bold vehicle choices.

The tried and trusted cars, which feature every year as finalists in the Gumtree Pre-Owned Auto Awards, are there for a reason or for several reasons - they hold resale value well, run reliably, are relatively inexpensive to service, and, very importantly given concerns about the immediate future of the rand, have good fuel consumption performance.

In the absence of any realistic evidence of a significant change in the macro-economic outlook, we can expect these key trends on SA vehicle buying revealed in the Q2 data to only get stronger in the near future.

                                 Image: QuickPic

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