Used cars back in favour as demand for new vehicles drops

20 Aug 2023

The used car market is showing strong signs of recovery. AutoTrader says customers are in the market to buy, average prices are down by 6.5% and there’s more stock — all helping to drive sales.

AutoTrader says sales via its platform grew 8% in July, with average prices dropping.

But searches are down on last year. Its latest AutoTrader Mid-Year Car Industry Report shows that in the first six months of 2023, more than 263 million searches were conducted, a 10% decline from 2022.

South Africa’s biggest motoring marketplace says that so far this year, 175 million customer advert views – a performance indicator for car dealers, serving as the precursor to an enquiry or lead on the AutoTrader website – CAVs were opened, which is a year-on-year increase of 14%.

Overall customer enquiries are down by 12% year on year.

With more than 17 consumer searches per second and more than R65.7-billion in sales this year, the platform’s CEO George Mienie says the used-car segment is gaining momentum. “Despite numerous challenges, the South African automotive industry has shown remarkable resilience and progress. Collaborative efforts among automakers, dealerships and tech giants have accelerated demand and supply, ensuring the industry’s competitive edge on a global scale.”

Toyota is this year’s top brand, with 28,061 passenger cars sold via AutoTrader. The average Toyota sold for R420,021, with a mileage of 86,373km and a model year of 2018.

Toyota holds a 17% share of the used car market.

In the year ending June 2023, 168,897 used cars were sold in SA, with an average selling price of R400,118, year model being 2018 and 78,943km on the clock. The average selling price was 6.5% lower, with 5.7% higher mileage.

The top five brands are consistent, with Ford selling more used cars than BMW, despite BMW receiving more enquiries than Ford.

The top-selling used car model so far is the Ford Ranger: the average Ranger is a 2010 model, with 90,659km on the clock and a sales price of R433,371. So far, 9,301 used Rangers have sold this year, which is 6% of the overall sales figure – more than the total sales of Nissan, Audi, KIA, and Renault.

Toyota’s Hilux is the second most sold used car, with Volkswagen Polo in third place.

used cars (Graphic: Supplied)

Four vehicles – the Polo, Mercedes-Benz C-Class, BMW 3 Series and Ford EcoSport – are on the list of top-selling used cars, but not on the list of top-selling new cars, while four cars on the list of top-selling new cars don’t appear on the list of used top sellers (Toyota Corolla Cross, Toyota Hiace, Toyota Starlet and Suzuki Swift).

All in all, the top 10 most sold used models comprise 29% of all used models sold.

Electric vehicles (EVs) are in short supply: so far, only 15 EVs have been sold through the platform – commanding an average price of R1,455,079 – with average mileage of 16,331km and year model of 2021. That’s far higher than the sweet spot for consumers. AutoTrader’s 2022 Electric Car Buyers Survey revealed that EVs priced below R600,000 were the preferred range for potential buyers.

Globally, SUVs are the most rapidly expanding body type, attracting the highest level of attention from in-market shoppers. In the past, single and double-cab bakkies have generated substantial search volumes, but SA consumers are now particularly interested in SUVs, with the Ford Ranger and Toyota Hilux being exceptions to the rule based on searches, advert views, enquiries and sales.

Its latest used car sales data, released earlier this month, indicated that 32,090 units were sold last month, which is an increase of 2,434 units over June.

AutoTrader currently maintains an inventory of more than 80,000 listed cars.

In November last year, it voiced concern about the spike in used vehicle prices due to growing demand, saying there are signs that the bubble may be about to burst. This saw the average list price of used cars for sale rising by 10%, from R386,682 in 2021 to R427,290 in 2022.

Financing for vehicles has been declining too. In May, TransUnion’s Q1 2023 Vehicle Pricing Index showed a 12% reduction in finance agreements for passenger vehicles in Q1, with new car sales declining by 2.6% and used car sales by 17.7%.

TransUnion Africa said it has witnessed a sharp decline in financed purchases, driven by vehicle price inflation, declining consumer disposable income and negative consumer and business sentiment.

Meanwhile, Naamsa’s quarterly review of the new vehicle manufacturing industry showed worrisome signs of strain as new vehicle sales during the second quarter of 2023 fell 8.1% quarter on quarter, which it says reflects the strain on consumers’ budgets due to interest rate hikes and the ongoing affordability crunch. DM

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