So far in 2024, the South African automotive market has seen a marked shift in consumer behaviour, driven largely by the ongoing economic challenges affecting multiple sectors.
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The economic downturn South Africa is experiencing throughout 2024 also impacted new car sales, as evidenced by the monthly sales data released by Naamsa, SA’s Automotive Business Council. As consumers tighten their belts, there is a growing preference for more affordable mobility solutions, with pre-owned vehicles becoming an increasingly popular choice across all segments.
WesBank’s Business Intelligence data for 2024’s first half sheds light on this trend. The bank’s figures reveal that applications for pre-owned vehicles have significantly outpaced those for new cars, by a ratio of more than two-to-one. Lebo Gaoaketse, Head of Marketing and Communication at WesBank, highlights the numbers:
“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.”
This shift underscores a notable change in the buying patterns of South African consumers, who are increasingly prioritising affordability. Gaoaketse adds: “The main reason for the sizable interest in used cars is affordability. 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.”
Challenges in the Market
However, buying pre-owned cars is not without its drawbacks. Gaoaketse cautions that “the downside, though, to buying a pre-owned car is that the bundled maintenance or service plan, as well as the manufacturer’s warranty, might have expired or be nearing expiration. This means the owner will have to foot the bill for the ongoing maintenance of the vehicle.”
Furthermore, the condition of a used car heavily depends on how well its previous owner maintained it. For this reason, Gaoaketse advises buyers to purchase from a reputable dealer to ensure the vehicle has undergone thorough checks and is in good condition.
While the demand for pre-owned cars remains strong, new car sales still hold certain advantages. The ability to customise features, along with the peace of mind provided by comprehensive warranties and service plans, makes new cars an appealing choice for those who can afford them. Gaoaketse adds: “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.”
