Rising demand for motor vehicles, supported by improving market conditions, are giving rise to a sustained improvement in sales across all sectors of the trade.
The most accurate indication of this is the strong rise in new vehicle sales last month which recorded sales leaping by 1260 units from 35 086 in 2017 to 36 346 units this year, a significant increase of 3,6% year-on-year.
According to one of the country’s leading auctioneers, Clive Lazarus, of Park Village Auctions, the recent increases in new car sales will have an inevitable knock-on effect for all sectors, including the used motor vehicle and auction sectors.This is because ofimproved availability of stock in the form of trade-ins and out-of-hand sales of cars being replaced.
“Another unforeseen consequence of increased motor vehicle sales, is unfortunately, the defaulting of repayments of a certain percentage of buyers whose vehicles will have to be repossessed to cover costs. Along with out-of-hand sales of cars on auctions, this influx of repossessed vehicles gives rise to large-scaleauctions of these cars which further stimulates overall sales.
“At present this means that buyers have every opportunity of finding a car that is right for them, whether it be a new or second-hand vehicle, or their dream car at the right price on auction. With rising disposable income of consumers, improvements in South Africa’s political and policy environment, lower interest rates and the maintenance of an investment grade rating with a stable outlook by a major credit ratings agency, it is as good a time as any to buy a vehicle.”
However, Roy advises, prospective buyers should remain mindful of the following five factors that could affect affordability over the duration of the term of finance:
- Affordability of finance – make sure the vehicle repayments are affordable even in the event of future interest rate hikes
- Resale value – ensure the brand holds enough value to recoup finances within a reasonable period if required
- Cost-of-ownership – do your research. Fuel economy, service costs, tyres and other consumable costs play a role in the overall affordability of a car.
- Suitability – try not to compromise on the essentials when buying a car. For example, how many passengers will it carry, load ability, road requirements etc.
- Want-a-bility – you have got to want the car you buy for less practical but equally important reasons, such as status, drivability, fun-factor etc