Rental car cycle benefits auctions
THE year started off with a bang for the new car industry, with just over 55,000 units selling straight off the bat.
“Positive though this may seem, the numbers are somewhat out of kilter,” says Park Village Auctions chief vehicle auctioneer Clive Lazarus.
He believes two trends have contributed to the abnormally high sales — specifically, recent exchange-rate weakness and strong demand from the rental car market.
“The recent decline in the value of the rand is stimulating some pre-emptive buying by consumers seeking to avoid price increases later this year, which, coupled with strong demand from the rental car market, led to the scenario which played out in January,” says Mr Lazarus.
“The spike in rental sales was an exception and new car sales normalised during the course of February,” he says.
Interestingly, he notes that while the rental car market stimulated much of the demand for new cars, the auction sector is also benefiting in that it is absorbing a significant amount of the rental car market’s old stock, which is largely characterised by wellmaintained, low-mileage models.
On the whole, the outlook for SA’s new car sector is positive.
Factors that will continue to support domestic sales include the low interest rate environment, replacement demand, a highly competitive trading environment characterised by attractive incentives, low debt-servicing costs and the introduction of high- technology new models.
Mr Lazarus believes rising inflationary pressures are expected to limit growth in real disposable income, which, together with generally expected rising new vehicle prices, will result in a significant moderation in the rate of new car sales over the balance of the year. “Simply put, the current marginal price gap between new and used will grow, making used cars a more appealing option for many consumers as the year progresses.”
In terms of general auction market characteristics, he says bidders are increasingly gravitating towards “clean” cars that do not require repairs.
Kia and Toyota continue to be popular brands and vehicles that fall into the R100,000-R150,000 price bracket continue to sell well, he says.
Looking ahead, Mr Lazarus says the implementation of e-tolls and increasing fuel costs will also encourage a shift to used cars.
Meanwhile, Park Village Auctions will make available a going agricultural concern in Hazyview, Mpumalanga.
Located on portion 16, on Hazyview Road, the property in question specialises in banana farming. Dubbed LaLa, the farm measures about 17ha and boasts a number of appealing features, including a farmhouse complete with a generous veranda overlooking a swimming pool and braai area, a beautiful thatched guest cottage, refrigerated ripening rooms, packing sheds, storerooms, workshops and staff accommodation.