South African car buyers are happier than ever to go pre-owned

The South African car market is dominated by pre-owned vehicle sales.

The local new car market did get its first annual uptick in four years during 2017 but the growth was only a modest 1% and, by Gumtree Auto’s calculations, there were approximately twice as many used vehicles sold during the year as new ones.

Jeff Osborne, Head of Automotive for Gumtree SA, notes that new car price rises generally remain below inflation while many pre-owned vehicle brands have seen a marked increase.

According to Osborne several factors influence this trend including a tough economy, the growth of online platforms which enable individuals to buy and sell easily, improved warranties and service plans on pre-owned vehicles from dealerships, and better availability of financing for pre-owned vehicles. “I also think many people have lost some of the status imperative about new cars and are less self-conscious about pre-owned. They want to make a smart choice.”

He says that the first quarter of the year is generally peak time in the pre-owned market: “This is fueled by first-time buyers like students and people entering the workforce, and it also reflects the tendency of people to re-assess their budget in January and to change vehicles if they are either forced to or can afford it.”

Research by Gumtree UK shows that the main driver for pre-owned car purchase is a change in financial situation (29%), followed by a new job (20%), family growing (17%) and children eligible to drive (11%). Osborne believes those numbers are probably accurate for SA as well and says the majority of used car buyers only take between two weeks and a month from initial search to final purchase.

Osborne says the local pre-owned market is dominated by smaller cars. “Although we have plenty of bakkies, luxury sedans and even around 20 Ferraris listed on the site, hatchbacks make up 34% of our listings with Volkswagen and Toyota by far the most prevalent makes in that category. The bigger the vehicle and the price tag, the smaller the market.”

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