The availability of used-car stock may start improving in the next six months-plus, as rental companies defleet and consumers increasingly return to the new-car market, trading in their current vehicles, says InspectaCar CEO Pertunia Sibanyoni.
Rental companies only recently started to acquire new stock again in response to an uptick in travel and tourism, following the earlier lockdowns initiated by governments in response to the Covid-19 pandemic.
Also, as Covid-19 and ongoing vaccination efforts increase worldwide, the expectation is that new-car sales numbers and the availability of imports to South Africa will improve, alleviating and improving new-vehicle sales, which should allow for more positive consumer activity in the used-car space, notes Sibanyoni.
She also expects used-car pricing to improve as supply eases.
“Dealers are currently forced to pay top-dollar for used cars, passing this on to the customer.”
InspectaCar is a second-hand dealer franchise.
Sibanyoni confirms that the South African automotive industry is currently experiencing a scarcity of used-car stock, with demand exceeding supply.
“Customers are looking into downgrading. What we also saw during the lockdown is that we have some distressed customers for whom it makes no economic sense to have a million-rand car sitting at home, not being utilised.
“So, customers are looking for more affordable, quality vehicles with lower mileage.”
She adds that it is also a good time to buy a used vehicle, with interest rates at “an all-time low”.
Another factor inhibiting stock availability is that financially stressed consumers are holding on to their vehicles for longer and not buying any vehicle – new or used, says Sibanyoni.
The high demand for used vehicles has, however, created a situation where dealers have battled to get stock and, when they do so, they have to “pay exorbitant prices”, she adds.
Despite this situation, she believes that InspectaCar dealers will be able to keep their heads above water.
“Dealers are resilient and have made it through even tougher times, given the 2008/09 recession, as an example.
“Having said that, we remain cognisant of our dealers who might descend into financial distress, due to lower vehicle sales. However, at this stage, used cars are in demand and price is key. I am quite confident that our dealers will manage to keep their heads above water, as they have been until now.”
Sibanyoni says InspectaCar saw a 14.7% drop in sales in 2020 compared with 2019, largely on the back of the impact of Covid-19. This year, however, has seen “a robust increase in sales of 8.4%”.
“However, we are not at 2019 levels just yet, due to supply and demand, as well as consumer activity that has tapered off,” she cautions.