Heels & Horsepower Magazine

New or used? Guide to buying your next car

Buying a car, new or used, is a big commitment, but with proper planning it does not have to be a daunting one.

There is a vast selection of cars available from a large variety of sellers, making it difficult to find the one that’s right for you. The first thing to do is to ask yourself how much you are prepared to spend on a car and to be realistic about what you can afford.

New or used, that is the question

Which of these is the correct choice? There is no right or wrong answer, but understanding the pros and cons of each is vital for making the best decision for you.

Benefits of buying a new car

The upside of buying a new car is the certainty of knowing exactly what you are buying. No one else has ever owned it, and there’s a guarantee that it has no hidden secrets from previous owners.

You also get the advantage of a full manufacturer’s warranty and in most cases, a service or maintenance plan. These plans can vary from brand to brand in terms of length of validity periods and what’s covered, so do your research and compare what’s on offer from different manufacturers.

Benefits of buying a used car

Choosing a pre-owned car or an earlier year’s model might be more prudent for your purposes. Some used cars, including dealer demo models, are often in almost new condition and still benefit from lengthy aftersales warranties and service plans, with reasonably discounted sticker prices depending on mileage and age.

Most car brands also offer approved pre-owned programmes, meaning these cars come with some added benefits such as extended aftersales plans and guarantees. They also undergo thorough checks by certified workshop technicians in order to get the stamp of approval for ‘approved’ status.

While depreciation is an unavoidable reality of owning a car, used vehicles almost always suffer less depreciation from purchase price than a new one. In other words, the original owner, who bought the car new has already incurred a significant amount of depreciation simply by taking ownership. When buying a used model, you’re starting off from a lower initial outlay and the effects of depreciation are felt less in your wallet.

There are some excellent deals to be found in older model used vehicles, but it can also be a riskier purchase as vehicles’ histories get cloudier as they age. Try to identify cars with full service histories, and even better are those with full histories at official franchise dealers. Also, try to take a trusted mechanic with you to view an older car to make sure there are no major issues before taking delivery.

It’s also worth considering buying extended warranties, either from the manufacturer itself where applicable or from a third party.

Start with a budget

The most important part of the car-buying journey is compiling a list of all current expenses and income. It is important to shop around and compare car prices to find a sensible and affordable car that fits within your budget. Don’t forget to budget for fuel, insurance, tyres, service costs and more – and remember that these costs can change over time.

It is also advisable to build some leeway into your budget to accommodate for rising fuel prices, interest rate increases and unexpected costs associated with driving.

Choose a reputable dealer

If a deal seems too good to be true, it normally is. It might be tempting to buy a newer, fancier car advertised at a low price by a small independent dealer or private seller, but you must let common sense prevail. There is probably a reason why that car is priced the way it is, and you might run into issues with it down the road.

It’s safer to do business with reputable dealers who will go to great lengths to protect their reputation through quality products and customer service.

Good start to the new year with impressive January car sales figures

By H&H Admin

An increase in the cost of living at the start of 2022 did not discourage South Africans from buying new vehicles during January.

South Africans were faced with fuel price hikes and another increase in interest rates as the new year started, but that didn’t deter them from buying new vehicles during January.

According to naamsa | the Automotive Business Council, January new vehicle sales increased 19.5% to 41,382 units compared to the start of 2021, creating a solid start to the year and the market’s continued recovery.

“January new vehicle sales kicked off the year at similar levels to the momentum created during the second half of 2021,” says Lebogang Gaoaketse, Head of Marketing and Communications at WesBank, referring to four months of sales in the period exceeding 41,000 units. “While some purchase decisions may have been deferred out of December into the new year, January sales provide a solid start to the year, raising the hopes of manufacturers and dealers for ongoing market improvement.”

While year-on-year comparisons remain difficult to interpret because of differing pandemic circumstances, WesBank remained positive for a continued slow recovery of the market during 2022.

Both passenger cars and light commercial vehicles (LCVs) started the year positively, increasing 26.6% and 3.8% respectively. Dealer sales in the passenger car space out-stripped the overall market, increasing 33.7%, a very positive sign of consumer demand.

Sales into the rental market also indicate an increase in business confidence and a more positive outlook to tourism with sales in the channel up 21% during January.

“While gradual interest rate hikes are inevitable over the course of the year from their record lows, their impact should be considered within purchase decisions and affordability,” says Gaoaketse. “Rising costs of living amidst more slowly recovering earnings are expected to continue placing pressure on household incomes and the wherewithal for consumers to afford new vehicles during 2022. But price inflation in the pre-owned market and necessary replacement cycles some two years after the onset of the pandemic should be expected to fuel demand.”

Here are the sales figures for October 2021

Press Release: WesBank

Stock shortages continued to thwart South Africa’s new vehicle market during October. However, the market continued to show a robust performance, despite the volumes being lower than September.

According to naamsa | the Automotive Business Council, 41,035 new vehicles were sold during October, an increase of 6.1% over the same month last year. Although September sales were the second-best volume month this year, October sales were 4.9% slower than last month. It is also important to note the context of October sales within the four months this year that have sold more than 40,000 units.

“The new vehicle market appears to be recovering strongly, demand out-stripping current supply constraints,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “The second half of the year has performed strongly since the mid-year lockdown restrictions, with the market trading above 40,000 units a month for the past three months.”

WesBank’s own data indicates a resurgence in the South African motor industry. “While we have seen high demand for pre-owned vehicles over the last two years, a slow shift back towards new vehicles may be currently underway,” says Gaoaketse. “Compared to a year ago, applications for to WesBank for new car deals rose 1.8% during October, while applications for pre-owned deals declined 5.9%. In addition, the bank’s used-to-new ratio has shifted over the 12-month period from 2.25 used vehicles financed for every new vehicle a year ago, to 2.08.”

However, the issue of supply is a global factor that skews the overall market picture. “Until global manufacturing stabilises off the back of the pandemic and resolves its micro-chip shortages, consumer and business purchase decisions will be swayed by availability and necessity,” says Gaoaketse. “The good news is that South African car dealers are in a much more sustainable position than a year ago.”

South Africa’s new passenger car market was up 3.1% to 27,496 units, displaying a robust consistency throughout the year. The Light Commercial Vehicle (LCV) market remains far more volatile. While it was down 10.9% in September, the segment bounced back to increase 15.9% during October to 11,188 sales.

A similar trend played out in the dealer space with passenger car and LCV volumes up 2.7% and 16.5% respectively. The market once again benefited from a sizeable volume of rental sales, with 5,002 passenger cars and 730 LCVs selling into fleets.

“Although the market looks in better shape, affordability continues to be a major consideration,” says Gaoaketse. “Significant fuel price hikes this month and the prospect of interest rates potentially increasing with the return of inflation are factors for consumers to consider when purchasing their next vehicle.” 

WATCH: Here’s how the SA motor sector performed in September 2021

New vehicle market continued to recover some momentum during September following the disruptions experienced in the economy during July.

Building on August sales successes, September sales continued to capture reassuring consumer demand and provided some reassurance for a stronger final quarter.

New Vehicle Sales Recovery Back On Track

The new vehicle market continued to recover some momentum during September following the disruptions experienced in the economy during July. Building on August sales successes, September sales continued to capture reassuring consumer demand and provided some reassurance for a stronger final quarter.

According to naamsa | the Automotive Business Council, September new vehicle sales increased 15.8% to 43,130 units compared to the same month last year. More reflective of actual performance, the month’s sales were up 4% relative to August sales, which was the second-best sales month this year prior to September’s performance.

Although new vehicle sales are 30.1% up year-to-date to 345,172 units compared to the same pandemic-impacted period last year, WesBank continues to finance well over two used vehicles for every new vehicle.

While demand in the pre-owned market remains very strong, used car price inflation may begin impacting this momentum.

Lebogang Gaoaketse, Head of Marketing and Communication at WesBank.

The sales mix across new and pre-owned is an interesting factor impacting the sustainability of the motor retail sector during the pandemic.

“While the manufacturers are naturally focused on selling new vehicles, the pre-owned market influences brand affinity. However, on a retail level, sales are sales, whether new or used, providing mobility solutions to customers and cashflow for dealers,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank.

There’s no denying that the motor industry is facing unusual times. What has been prevalent throughout, however, is the sector’s unfailing resilience to prevail.

“While demand in the pre-owned market remains very strong, used car price inflation may begin impacting this momentum. That demand may become more about preferential specification than affordability in a time when the trade is paying a premium on certain pre-owned models,” says Gaoaketse.

“While stock availability in the new vehicle market remains stressed, forcing some consumers into the pre-owned market, the sheer demand remains encouraging for the industry once global stock shortages are alleviated,” Gaoaketse continued.

Most impacted by that stock situation is the Light Commercial Vehicle (LCV) market. LCV sales declined 10.9% during September compared to September 2020 to record 10,943 sales. This is 802 units or 6.8% less than last month. While dealer channel sales in this segment were less affected (down 7.2%), there is a noticeable lack of Government volume (down 64%) impacting the segment.

Driving the market growth was the 30.5% gain in passenger car sales year-on-year. September’s passenger car volume of 29,538 units was bolstered by 4,951 sales into the rental market and was 8.5% ahead of last month’s market. Dealer sales also swelled 17.3%, providing that much-need sustainability injection into the retail space.

“The Reserve Bank’s decision last month to maintain interest rates will continue to provide stimulus to the market, whether new or used with both sectors’ sales ultimately contributing to the overall recovery of the South African motor industry,” Gaoaketse concluded.

New vehicle sales on the rise in August 2021

The new vehicle market bounced back during August after being unsettled by a barrage of impacts during July.

Not only did sales show good growth over the same period last year, but August’s new vehicle sales were the second highest this year at 41,425 units, after March’s figure of 44,217. According to naamsa | the Automotive Business Council, new vehicle sales were 24.6% up on August last year.

“Taking into account that July sales were significantly disrupted, the fact that sales were up 8.9% over June indicates some reparations from impacted July sales,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. August sales were 25.3% up over the skewed July new vehicle sales result.

WesBank shares the confidence expressed by motor industry CEOs during the first half of the year in a survey conducted by naamsa. “We have consistently held the optimistic view of recovery for the industry during 2021, with various signs showing growing confidence from both consumers and business,” says Gaoaketse. “To have this environment amplified by industry confidence will help to continue to build momentum in the market’s recovery, preserving jobs and fulfilling demand.”

Taking into account that July sales were significantly disrupted, the fact that sales were up 8.9% over June indicates some reparations from impacted July sales

– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank

In terms of demand, WesBank believes the market is out-running the industry’s ability to supply. “Between the challenges of the pandemic, micro-chip shortages affecting international production – and therefore import supply to South Africa – and the prevailing market conditions that have simply hampered the free supply of certain models, the new vehicle market is poised to capture growth opportunities while trying to keep up.”

The trend towards the pre-owned market continues, driven primarily by affordability

– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

The bank’s demand is measured by applications for finance that continue to sit at levels equivalent to or above those experienced prior to the pandemic. “This is reassuring in two senses,” explains Gaoaketse. “On one hand, consumers have been keeping their vehicles for longer, especially delaying purchases through the pandemic. This will create natural demand on the replacement cycle as consumers need to renew their ageing vehicles, probably with lower mileage.

“On the other hand, the current performance of the market is related to supply, rather than demand, meaning a healthy recovery for the industry is on the cards when stability returns to global production,” says Gaoaketse.

The outlook for the remainder of the year looks positive and will hopefully not be impacted by further lockdown restrictions

– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

WesBank warns that not all that demand will go to new vehicles, however. “The trend towards the pre-owned market continues, driven primarily by affordability,” says Gaoaketse. “This remains good news for dealers in support of their viability across new and pre-owned showroom floors. Consumers will also benefit from better used vehicle stock once the replacement cycle activity kicks in, due to those low mileage vehicles that have been used less during lockdown.”

– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

The growth in the market was shared across most sectors, including another strong performance from the rental sector, buying 4,962 units in total.

Passenger cars grew 40.5% over August last year to 27,157 units. Of these, 22,225 units were sold through the dealer network, 25% ahead of the same period last year, showing a resumption in demand and confidence.

The Light Commercial Vehicle (LCV) market was impacted less at 11,749 units, 3.8% ahead of August 2020. In fact, dealer sales were 1% down in this segment year-on-year.

“The market showed good recovery during August from the loss of momentum experienced in July. The outlook for the remainder of the year looks positive and will hopefully not be impacted by further lockdown restrictions or other unforeseen factors,” says Gaoaketse.

Momentum Continues To Build In New Vehicle Sales

New vehicle sales continued to build their momentum during June, despite the continued impacts of the pandemic on the industry and the country’s economy. Lebogang Gaoaketse, Head of Marketing and Communication at WesBank shares details.

New vehicle sales continued to build their momentum during June, despite the continued impacts of the pandemic on the industry and the country’s economy. A year ago, the market was under Alert Level 4 lockdown regulations, a position the country once again enters with adjusted restrictions.

“While the majority of sales during June were not severely impacted by COVID-19 restrictions, we should expect a returned level of hesitancy during July,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Both business and consumer confidence are certainly building their own momentum despite the current environment, which is providing continued energy into the slow recovery of the market.”

The apparent stability in the market is reassuring given the consistency in sales over the past two months

– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank

New vehicle sales in June were marginally down on May’s figures according to naamsa | the Automotive Business Council, a more reflective indication of sales than considering the 20.2% growth year-on-year. June sales registered 38,030 new vehicles compared to the 38,320 in May and 31,643 in June last year.  A further consideration is the more sombre fact that last month’s sales are 17.2% down on June 2019 sales.

“The apparent stability in the market is reassuring given the consistency in sales over the past two months,” says Gaoaketse. “In 2019, the market was particularly volatile, yet our trading conditions now are equally as unpredictable.”

The passenger car segment accounted for 24,482 units, 28% up year-on-year and marginally higher than May sales. The segment was bolstered by 2,565 units into the rental market, which is significant given the appetite for renewals in the fleet industry. By comparison, consumer demand was relatively softer, the dealer channel up 15.2% year-on-year, although stable compared to May.

Light Commercial Vehicle (LCV) sales were 5.9% down to 11,208 compared to last month, but up 9.6% year-on-year. Dealer sales in the segment were similarly lower, 5.1% down.

People’s transport considerations are evolving, and both the country and the industry need to maintain the pace in an exciting mobility age.- LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK



“Stock shortages continue to have some impact on overall sales as manufacturers continue to manage demand versus supply on imports and availability of production, while local manufacturing continues to experience some parts supply challenges,” says Gaoaketse. However, year-to-date sales remain reassuring as the market continues its slow recovery.”

First-half sales were 227,440 units, an increase of 40.1% compared to the first half of 2020 within the context of locked-down sales during March and April last year.

Year-to-date sales remain reassuring as the market continues its slow recovery.

– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

“The industry continues to consider the Aftermarket Guidelines, which come into effect today, as well as important considerations of the protection of personal information,” says Gaoaketse. “People’s transport considerations are evolving, and both the country and the industry need to maintain the pace in an exciting mobility age.”

Challenges and opportunities for recovering new vehicle sales in SA – May 2021

As the country adapts to adjusted Level 2 lockdown regulations, the impact of the pandemic remains high on the motor industry’s agenda.

A year ago, retailers were resuming sales under Alert Level 4 and the market mustered 12,874 sales during May 2020. One year later and the picture remains subdued, albeit with more stability as the market recovery continues to gain some momentum.

The market continues its slow recovery in the face of several challenges and opportunities

– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank

According to naamsa, the Automotive Business Council, the new vehicle market sold 38,337 units during May this year. While unfair to compare this against May 2020 (up 197.8%), it is noteworthy that this represents a 7.6% growth over last month’s sales.

“The market continues its slow recovery in the face of several challenges and opportunities,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Interest rates remain at historical lows, providing some of the most affordable finance and consequently opportunities to purchase a new vehicle. However, price inflation against the backdrop of a subdued economy continues to be a barrier for many purchase decisions.”

Compared to a year ago, new vehicle finance agreements through our books are averaging a deal size of R356,313, up 11,2%

– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

According to the latest Vehicle Pricing Index (VPI) released by TransUnion in May, new vehicle prices in South Africa rose at nearly three times the general inflation rate during the first quarter of 2021. “

When measured against WesBank’s average deal size, we can see a similar trend in the amount of finance to access these vehicle purchases,” says Gaoaketse. “Compared to a year ago, new vehicle finance agreements through our books are averaging a deal size of R356,313, up 11,2%, while pre-owned deals average R253,537, an increase of 10,6%.”

Demand for vehicle finance continues to be reassuring, however. “Attractive deals on the showroom floor and a growing need for replacement as that cycle increased over lockdown are contributing towards the market’s recovery,” says Gaoaketse.

While May’s sales growth over April is welcomed, it should be noted that April sales were down on March figures

Supporting this demand, the passenger car segment sold 24,122 units during May, 85,1% of which were retailed through dealers to consumers. Dealer channel sales remain relatively robust and are 41,7% ahead year-to-date, for which retailers will be grateful. This segment was 7,1% ahead of April sales.

The Light Commercial Vehicles (LCVs) segment sold 11,930 units during May, 10% more than in April, improving the segment’s position significantly. Year-to-date sales in the segment are 68,5% higher than for the same period last year. Dealer channel sales in the segment accounted for 91,4% of sales.

“While May’s sales growth over April is welcomed, it should be noted that April sales were down on March figures,” says Gaoaketse. “This is indicative of the market’s slow recovery, but reassuring, nonetheless. As the industry prepares for the implementation of the Guidelines for Competition in the South African Automotive Aftermarket on 01 July, the motor industry has many opportunities to continue its significant contribution to the South African economy.”