Used vehicle prices on the rise

Johannesburg - The local market is still experiencing severe shortages of used good-quality vehicles, and as a result prices are rising - not only of those vehicles offered for sale, but also of trade-in values. Fewer used vehicles are also leaving the floors.

Mike von Höne, chief executive of TransUnion South Africa, describes the strengthening of used-vehicle prices to be the most important information coming out of the company's recent forum which supplies information on the motor industry.

If only there was a greater supply of good quality-stock, they would be able to sell more, says Von Höne, one of the speakers at the forum in Johannesburg on Friday.

Many motor dealers have survived the crisis in the motor industry thanks to sales of used vehicles.

November saw a peak of 2.4 used vehicles being sold for each new one. In February the figure was 1.83 for each new unit. With new vehicle prices remaining reasonably stable for now because of the strong rand, the difference between the prices of new and used vehicles has narrowed.

Rising vehicle prices are not new - prices have lifted over the past couple of months.

Last year there was a period when the prices of new vehicles were rising while those of used vehicles came down.

Von Höne says this was a good indication of the tremendous pressure consumers were under. The market "literally sold nothing", he observes.

But with fewer people being able to afford new cars, or others too afraid to enter the market, the flow of used vehicles to the market has diminished. Two other key sources have also begun to dry up - banks are repossessing far fewer vehicles, while fleet-rental companies are holding on to their cars for longer to meet the anticipated demand during the World Cup soccer tournament.

Because of the shortage, in certain cases dealers are paying more than the market value for certain models.

- Sake24