Used is the brand new ‘new’: Interest in SA second-hand car market surges

Interest in second-hand vehicles surged to an all-time high of 401 million online searches over mid-2019/2020, reflecting a massive 40% year-on-year increase in used car searches.

Providing a much-needed confidence boost for South Africa’s battered automotive sector, AutoTrader’s 2020 Car Industry report — which was released on Monday 3 August 2020 — reflected encouraging buoyancy in the used car market, underpinned by robust vehicle search data and interest.

WHO AND WHY

AutoTrader, which holds a commanding position in South Africa’s online vehicle trading market, also serves the industry through important overall sector and market monitoring and research initiatives and publications.

The 2020 AutoTrader Car Industry Report reviews the market conditions and trading (and vehicle search) activity in South Africa over a year period between 1 July 2019 and 30 June 2020 — thereby providing the most up-to-date snapshot of the used car market.  

“A total of 401 million online searches for used cars took place last year, which is an all-time record and an almost 40% increase year-on-year. Furthermore, the average selling price of a used car in the last year was R289 312, an increase of R9 003 over the previous year,” noted AutoTrader.

“These are among the key findings contained in the 2020 AutoTrader Car Industry Report. This annual report details trends and insights into the South African used car market.

“As the largest digital automotive marketplace in South Africa, AutoTrader provides unparalleled insight into car-buying patterns in the country,” said the company.

WHAT IS IN IT?

AutoTrader described its latest report as “extremely comprehensive.”

“It covers anything and everything from exclusive insights from industry experts, such as AutoTrader chief executive George Mienie and National Association of Automobile Manufacturers of South Africa (Naamsa) chief executive Mike Mabasa, to current data and statistics pertaining to the used car market.

“This provides insight into which makes, models and – for the first time in South Africa – which variants, including trim levels, are important to car-buying consumers,” explained AutoTrader, adding that the report also focused on the impact of COVID-19 on the automotive sector.

According to AutoTrader CEO Mienie, the report is especially useful during turbulent trading conditions as the data helps dealers to acquire stock in the right price bands that also meets consumer demand.

HIGHS AND LOWS

“It goes without saying that 2020 has probably been one of the most challenging years in the history of the automotive business; we have been on a roller coaster ride.

“This is confirmed by our Retail Price Index: In Q3, ending September 2019, we saw a high of 2.4% year-on-year and then it sank to a price deflation low of -0,9% year-on-year in Q1 ending March 2020,” said Mienie.

Highlights emerging from the report include that:

• The most searched for brand is BMW;
• The most sold car is the Ford Ranger;
• The most searched for variant is the Volkswagen Golf GTI; and
• The most searched for price range is R200 000 and under.

ANOTHER PERSPECTIVE

Nelson Mandela Bay-based dealer principle Derick Minnie, who operates multiple King Cars dealerships in Port Elizabeth, said that while online platforms — social media platforms in particular — were fielding good numbers in terms of inquiries, the challenge remained turning the inquiries into sales.

“Sales are good at present, but are continuing in tandem with the normal trends we experience, but they do not necessarily come off the back of an online search,” he noted.

With regards to vehicle brands, such as BMW, which have recorded the highest number of searches, Minnie pointed out that this would be influenced by the brands or stock a used car dealer chose to stock, or had on its showroom floor.

Asked whether the interest in BMWs, as per the AutoTrader Report, reflected consumers’ choice and financial ability to seek out a premium brand in the used car market which they would otherwise not seek out in the new car market, Minnie, however, said this would be difficult to determine.

FAST FACTS AND FINER DETAILS

Sub-titled “Future-Proofing SA’s Automotive Industry”, AutoTrader’s new report shone the spotlight on the following “Fast Facts”:

• In the period under review, the online used car environment saw 546 million pages opened.
• 401 million searches were done in 12 months;
• 177 million consumer adverts were viewed;
• More than three million leads were created for sellers;
• The average mileage on vehicles sold during the review period was 74 923km;
• The average price of vehicles sold was R289 312; and
• The average year model of cars sold 2014.

WHO IS BUYING?

• At 6%, the 65 years and older age category accounted for the smallest proportion of interest in the online vehicle market, while the 55- to 64-year-old age group accounted for 7%.
• More interest was recorded in the 18- to 24-year-old category which commanded 13% of the searches.
• The remaining and the bulk of the searches were recorded in the 25 to 34 years group, which topped the search data with 35% of the overall searches, with the 35- to 44-year-old group claiming 24% of the interest in used cars. The 45-54 age category accounted for the remaining 14% of the searches.
• Men dominated the period under review with 65% of all searches, with women securing 35%.

In his overarching commentary on the sector as a whole, Mienie was at pains to note the lack of predictability which faced the industry going forward and urged industry participants to make every effort to “future-proof” their businesses.