‘Good deals on vehicle trade-ins in the next six months’
The next six months could be a good time to trade in your car for a new model, because dealers are expected to make attractive offers to bring in more buyers.
However, the potential to receive a higher price is not in itself a good reason to trade in your car. You should aim to pay off your current car as soon as possible and then save towards a deposit on a new car. The bigger the deposit, the smaller your repayments and interest costs.
Marcel de Klerk, Absa Vehicle and Asset Finance’s managing executive, says there is big demand for used cars, and prices are expected to start rising. This means you are likely to receive a higher trade-in value than previously if your car is one to three years old.
According to the National Association of Automobile Manufacturers of South Africa, the sale of new passenger vehicles was 3.48 percent higher in July than in June.
De Klerk says the rise is probably due to more working days in July in which to sell cars. “There are also more fleet sales between July and November,” he says.
De Klerk says the fact that an average of 960 cars were sold each working day during June and July is a good sign, and he doubts the market will get worse.
However, De Klerk cautions that the market is expected to show a real recovery only from about March next year.
Sales in January and February are usually not high, because of school holidays and the fact that most people are cashstrapped after the holidays.
Bank data show that owners of new cars are holding on to their vehicles for an average of 39 months (an increase of more than 10 percent from last year). This means that although interest rates have dropped, people are still not changing their cars as quickly as before.
De Klerk says one of the reasons for this is that after the National Credit Act was introduced in June 2007, it became legal for car hire purchase deals to private consumers to exceed a term of 54 months.