Big shift in local used car market as inflation kicks in
ALTHOUGH fuel hikes, inflation and challenging economic conditions are the main factors sending car buyers to the second-hand vehicle market, the sheer number of options available is also becoming a big drawcard.
TransUnion’s latest Vehicle Pricing Index (VPI) shows that used vehicle prices have experienced, on average, a more significant increase than new cars in South Africa, with the report recording a price increase of 8% in Q3 2023 (3% above inflation).
Notably, the report showed that older cars (>three years old) showed an even more significant price increase – with prices rising between 15.7% and 19.4%.
According to the report, the percentage of cars – both new and used – being financed below R200 000 declined to
19% in Q3 2023 from 20% in Q3 2022, likely due to the increased average purchase price of new vehicles, leaving little choice for prospective buyers in this price band.
The data further found that 28% of vehicle financing deals were for cars between R200 000 and R300 000, and 53% shopped for cars over R300 000.
TransUnion noted that this is a result of rising vehicle prices, with consumers forced to spend more for a reliable vehicle, while those in the used vehicle market moved to older cars to meet their needs.
Experts have noted that as much as price is a significant driver of the pre-owned car market, South African motorists are now also enjoying the wide variety of quality vehicles offered.
“Gone were the days when pre-loved vehicle lots might have had a few fixeruppers displayed in the back,” said Donovan Enslin, used vehicle manager for the Kelston Motor Group.
“I don’t think there is a manufacturer delivering a poor vehicle at the moment,” he said.
“You can now get a great vehicle for R150 000. Even at the lower end, you can be assured of a good vehicle, and the market is diverse. You are never limited in your choice.”
The country’s pre-owned sector has taken off amid higher fuel prices and a challenging economic environment.
Data from used-car platform
AutoTrader shows that almost
100 000 more vehicles were listed for sale between January and June 2023 compared with the same period in 2020.
In the same time frame, 18 new vehicle brands entered the market.
According to Enslin, in recent months there has been a rise in demand for compact SUVs and crossovers that were better equipped to negotiate South Africa’s notorious potholes.
“The moment you add ride height to a vehicle, you get a more comfortable drive. It’s preferable to having a hatchback, which can struggle on our roads.”
For this reason, the Chery Tiggo has become extremely popular, he said.
However, pre-owned Toyota Fortuners and Ford Rangers remained highly sought after – an insight that corresponds with AutoTrader figures for 2023, which indicates that the Japanese manufacturer takes up 15.3% of the listings, followed by VW (12.98%) and Ford (10.60%).
“I deal in these vehicles, and if it’s hard for me to choose from what’s available, it’s also going to be tough for a buyer. That’s how much we’re spoilt for choice,” said Enslin.