55% of used vehicles sold in SA are demo models or under two years old
June proved to be a good month for new car sales in South
Africa, with 29,886 new passenger vehicles sold – representing
year-on-year growth of over 4%.
This continues a positive trend over the past two quarters and
has been achieved in spite of a grim economic context.
It also contrasts with a small decline in the light commercial
vehicles, bakkies and mini buses category and a serious drop in
export sales.
Despite this positivity surrounding new car sales, twice as
many South Africans still buy previously owned vehicles, says
Jeff Osborne, head of automotive at Gumtree South Africa.
Osborne noted that the current trend into new vehicles is being
fuelled by a marginal decline in interest rates, improved
confidence and pricing.
“The demand for quality used vehicles has pushed their price up
while new vehicle price increases have been repressed in many
cases with dealers taking smaller margins,” he said.
“As the price gap narrows, and good maintenance deals are
offered, new vehicles become more attractive. That closing of
the gap is indicated by the TransUnion Used Car Vehicle Price
Index in Q1 2018 rising 3.5% while the New Vehicle Price Index
was up by only 2.3%.”
Osborne added that there are implications in this trend for
buyers and sellers of previously owned vehicles.
“The data shows that 55% of all used vehicles sold are either
demo models or are under two years old. That is now a very
competitive space and sellers will have to consider lowering
their prices,” he said.
Despite this competition, Osborne is convinced that pre-owned
will remain king of the local market.
“I anticipate a minor retreat for new vehicle sales when
manufacturers are forced to up their prices more significantly.
And, regrettably, the brief wave of optimism in the country
seems to be retreating which will translate into a reluctance
to spend on the full new price tag.”
Read: Why more South Africans
are moving to ‘use’ cars rather than own them – and how much it
costs
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