The prolonged economic downturn experienced across multiple sectors in South Africa has resulted in markedly depressed sales in the new car segment over the past 12 months. This is evident in the monthly new car sales data released by | the Automotive Business Council. As consumers seek more affordable mobility alternatives, a noticeable trend has emerged in favour of pre-owned vehicles across all segments.
WesBank’s Business Intelligence data for the first half of 2024 confirms this, with applications for pre-owned cars outpacing new car applications by a ratio of over two-to-one.
Shedding more light on the numbers, Lebo Gaoaketse, Head of Marketing and Communication at WesBank, said: “In the first six months of this year, WesBank received 337 061 applications for vehicle finance linked to new cars. In the same period, a staggering 688 316 applications were received for pre-owned cars.
“The main reason for the sizable interest in used cars is affordability,” explains Gaoaketse. “The inevitable depreciation of a vehicle means pre-owned cars are generally cheaper than brand new alternatives, with the rare exception of models that are considered classics or collector’s items. These can in fact appreciate in price due to their rarity that doesn’t match demand,” he says.
“The downside, though, to buying a pre-owned car is that the bundled maintenance or service plan, as well as manufacturer’s warranty, might have expired or be nearing expiration,” cautions Gaoaketse. “This means the owner will have to foot the bill for the ongoing maintenance of the vehicle.
“The condition of the car also depends on how well it was maintained by the previous owner. This is why it’s important to buy from a reputable dealer whom you can trust to have conducted the necessary checks to ensure the vehicle is in good condition.
“Furthermore, buyers in the used market don’t have the option to specify any additional features on the car they are buying. Finding that exact dream car thus requires extended hours of searching through used car catalogues.”
New car buyers don’t have this problem as they can configure their vehicle to match their taste and budget.
The peace of mind that comes with the new car is also unmatched thanks to comprehensive warranties and service plans one can get with new cars. This affords the owner worry-free motoring for the first few years of the asset.
“These new car perks, along with a cut in the repo rate and continued introduction of value-oriented models are some of the factors that are expected to drive the resurgence of the new car market, which remains a key part of South Africa’s economy,” says Gaoaketse.
