Is a re­ces­sion a good time to buy a car?

The Witness - Wheels - - INNOVATION -

IN Eng­land and con­ti­nen­tal Europe a car is a lux­ury be­cause pub­lic trans­port is su­perb.

In fact the Euro­peans get an­gry if pub­lic trans­port is more than five min­utes late.

It is safe for chil­dren to use pub­lic trans­port to schools and, if they have to walk to school from the sta­tion it is usu­ally quite safe, pro­vided of course no one has planted a bomb in the area.

In the United States much the same ap­plies in the big cities, but there a car is essen­tial be­cause of the huge area of the coun­try, as well as be­cause of the fact that cars and fuel are cheap in re­la­tion to fam­ily in­comes and motoring is still an en­joy­able pas­time with many fam­i­lies own­ing three ve­hi­cles or more.

In South Africa the situation is very dif­fer­ent. Ex­cept in two or three of the larger cities we have no re­li­able pub­lic trans­port and what we have is both ex­pen­sive and some­times un­safe and un­re­li­able.

Not sur­pris­ingly then a fam­ily’s first pur­chase, as soon as they can af­ford it, is a car.

Most mid­dle- class fam­i­lies would like two cars for the sake of con­ve­nience, but the fact that our rand has lost 50% of its value over the last five years has made this a pipe dream for many mid­dle class South Africans.

Sadly the story of our county’s eco­nomic woes con­tin­ues with fac­tors like a crip­pling drought driv­ing up food prices. The prob­lems in the econ­omy have been com­pli­cated by ris­ing in­ter­est rates and there are those econ­o­mists who pre­dict an over­all rise of around 1,5% this year. There are also the “run­ning costs” of liv­ing in cities, which con­tin­u­ally rise, like ser­vice and util­ity charges, while the cost of ed­u­ca­tion at all lev­els is crip­pling, es­pe­cially for the poor.

The only ap­par­ent light at the end of the tun­nel is the oil price, which has dropped by 60% since 2004 to around $ 30 a bar­rel and is likely to stay there for some while, but this is off­set by the weak rand.

Re­cently we saw a round of price in­creases on new cars, rang­ing from 10 to 15%. Some man­u­fac­tur­ers, like Hyundai, have tried to sweeten the deal with long war­ranties, while oth­ers have al­lowed ex­tended pay­ment plans.

The point is how­ever that what­ever the spe­cial of­fer, you will have to pay for the car and the monthly re­pay­ment is less than half the cost of ve­hi­cle own­er­ship.

Many peo­ple put their faith in the used car mar­ket and mo­tor ve­hi­cle auc­tions, while yet oth­ers look to leas­ing. The prob­lem with all of these op­tions is that the more the car you choose costs new, the more it will cost you whether it is new or used, owned or leased. One would ex­pect that cars made in the RSA would be able to avoid ma­jor price in­creases, un­for­tu­nately these ve­hi­cles are much de­pen­dent on im­ported parts, al­though some man­u­fac­tur­ers like Volk­swa­gen, run a used spares ser­vice for clients, where good qual­ity used spares are made avail­able.

Ev­ery­one in the mo­tor trade to whom I have spo­ken in re­cent weeks, has in­di­cated that there are likely to be more price in­creases this year and no one is will­ing to pre­dict what those will be.

If the rand does de­cline fur­ther they can po­ten­tially be very large in­deed. So our ad­vice to you is, if you are plan­ning to buy a car, the sooner the bet­ter.

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