Retail Motor Industry Organisation (RMI) CEO Jeff Osborne on Monday warned that South Africans should not wait too long before they “start thinking of buying a new car”.

He noted that the RMI, representing 14 sectors in the local automotive industry, believed new vehicle sales would rise by 8% in 2013 over 2012. The market grew 9.2% in 2012 over 2011.

The top-selling passenger car in 2012 was the Volkswagen Polo Vivo, with the top export model the Toyota Hilux pick-up. The ever-growing Hyundai was South Africa’s third-biggest passenger car brand, at 47 414 units, with Volkswagen and Toyota in first and second place, respectively.

“[2013] could be a year of two halves, with price rises having a greater impact in the second half of the year,” noted Osborne. “So, seize the opportunity – it is an excellent time to buy a vehicle. There is robust competition and [there are] extraordinary offers, particularly for first-time buyers.”

He could not quantify the price increases he expected for 2013, noting only that much of it would be driven by a weakening rand.

Rising new car prices would also lead to an in improved used car market, said Osborne, as the current marginal price gap between new and used was likely to grow, making used cars a more lucrative buy for many consumers.

Osborne said growth in the 2012 new car market would be driven by low interest rates, a “huge choice in models”, an emerging middle class, and movement in the replacement cycle.

“Many people are driving three- or four-year-old vehicles with enough residual value to enable them to do a trade-in deal for a brand-new vehicle.”

Looking ahead to the new year, Osborne regarded the implementation of e-tolls as a “big threat” to affordable motoring, while scheduled wage negotiations, following the end of a multiyear wage agreement, could see some turmoil in the automotive industry later this year.

Write-offs At Historical High
Vehicle write-offs following accidents were at an historical high in South Africa, said Osborne on Monday, with the cost of manufacturers’ parts often viewed as too high for a vehicle to be repaired.

“I am deeply concerned at the cost of warranty spare parts. In some cases this inflates the cost of repair so much that a vehicle is written off. This can lead to vehicles being scrapped too easily, with repair shops losing out on business.”

Osborne said there was a push from vehicle insurers to reduce the cost of vehicle collision repair, and to drive down the number of vehicle write-offs.

He said the insurance industry was investigating the use of non-original parts on vehicles that were out of warranty, in an attempt to “save the vehicle”.

He added that the RMI was “calling for dialogue with manufacturers to redress this [trend], as the overall affordability of owning/running a vehicle is a key consumer concern”.

Periodic Vehicle Testing
Periodic vehicle testing, where any vehicle ten years and older would be tested to determine its roadworthiness at five-year intervals, did not come to fruition in December 2012, as the RMI had hoped would happen, said Osborne.

While he acknowledged that it would be good business for the RMI and its members, he also believed that such a testing regime would help to curb the number of accidents on South Africa’s roads.

Osborne said the Department of Transport did not provide any reason for postponing the system’s implementation, or any alternative date for its roll-out.

“We are frustrated. It is way overdue and should be rolled out quickly,” noted Osborne.