Johannesburg - South Africans hard-hit by economic hardships are opting to buy used cars instead of new vehicles, the CEO of a vehicle risk intelligence company said on Wednesday.
TransUnion chief executive Mike von Hone said "there was a marked move in favour of used vehicles in 2008".
He was speaking at the TransUnion Auto Used Car Forum in Sandton.
"The ratio of new to used passenger vehicle sales [was] widening from one to 1.1 in 2007 to one to 1.8 last year and currently lying at one to 2.08 for the month of February 2009," said Von Hone.
Also, used passenger vehicles valued at under R100 000 made up 53% of all used car sales in 2008, up from 51% in 2007, he said.
"Ordinary consumers appear to be holding on to their cars for longer as they become more circumspect about over-extending themselves and it appears as if they are trying to pay down their existing debt levels before incurring any additional debt," said Von Hone.
Given the higher demand for cheaper cars, these vehicles had lost less value as a percentage of their new list pricing than higher priced cars.
"In addition, two- three- and four-year-old cars fared marginally better in 2008 than in 2007 in terms of holding their value when measured as a percentage of their new list price, an indication of the greater relative demand for used cars," said Von Hone.
"However, the gap between trade and retail prices widened to an average of 14.5% in 2008 as dealers traded more cautiously in tough economic conditions."
There was a difference in the gap between trade and retail prices among the different brands of cars, ranging from 12% to 17%.
Von Hone reminded used car buyers to check if the vehicle had been reported stolen with the police.
"The good news is that the number of dealer enquiries to TransUnion Auto regarding the 'pedigree' of a car, increased in 2008, despite the fact that the actual number of cars sold declined.
"However, about half the vehicles sold by dealers were not checked out.
This is of enormous concern when one considers that of the enquiries that were undertaken, 3.7% had a Saps [South African Police Service] interest, indicating that the vehicles in question may have been stolen," said Von Hone.
The National Association of Automobile Manufacturers of SA reported a 36.3% drop in new vehicle sales last month, compared to the February 2008.
Last month recorded the worst new vehicle sales in the past 20 years.
- Sapa