South Africans are trading down on their vehicles

The financial well-being of a whopping 65% of vehicle-buying consumers in South Africa has been negatively impacted by the nationwide lockdown.

Many (30% to be precise) are under pressure to replace their vehicle within the next four weeks. This is compelling evidence in favour of allowing all vehicle dealerships – both independent and franchised – to trade under level 4 of lockdown restrictions, says AutoTrader chief executive officer, George Mienie.

He said that as consumers lose their jobs and/or receive salary cuts, they are demonstrating an urgent need to free up cash or reduce monthly household costs. “Searches for second-hand vehicles under R50 000 have increased by almost 300% versus normal pre-lockdown levels,” he said.

“Clearly, South Africans are worried about how they will feed their families.”

Using AutoTrader data on consumer buying patterns, Mienie said that motorists, including higher income level consumers, are trading down in all categories.

Anecdotal feedback from dealers trading on AutoTrader reveals that motorists are trading down from a BMW X5 50D (R730,000) to a BMW 520d (R500,000). They are trading down from a Mercedes-Benz ML63 (R670,000) to a Mercedes-Benz C180 (R300,000).

And they are trading down from a Ford Ranger (R335,000) to a Nissan NP200 (R160,000).

The website has also conducted a survey during the first week of May 2020 in order to establish specific lockdown buying patterns.

“We have established that 30% of consumers indicate that they are under pressure to replace their vehicle within the next four weeks. This pipeline needs to be managed to avoid a further financial impact on both consumers and car dealers. The sooner consumers are allowed to trade with vehicle dealerships, the sooner their family’s financial pressures may be eased,” said Mienie.

He said that consumers also expected dealerships to be open and trading on Monday 4 May, as evidenced in the sharp increase in website traffic that day. “Enquiries to vehicle dealerships have increased by more than 150% compared to pre-lockdown levels,” Mienie said.

He said that it is therefore in the best interests of the South African consumer that all vehicle dealerships be allowed to trade under Level 4 and that “specific directions” be communicated by government as a matter of urgency so that dealerships are allowed to open their doors.

“It’s vital for the government to include independent dealerships since they dwarf franchised car dealerships in number in South Africa. These (the independent) outlets mostly fall into the small to medium enterprise category, which is arguably the sector currently most at risk. Furthermore, used car sales outnumber new car sales in South Africa by a factor of 2:1,” he said.

All the supporting infrastructure needs to operate too. “For the proper functioning of the supply chain for vehicle sales, licence departments, testing stations and roadworthy centres should open alongside vehicle dealerships in order to facilitate the transfer of ownership from dealerships to the buyer during Level Four,” Mienie said.


Read: These are the top 15 fastest-selling used cars in South Africa

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South Africans are trading down on their vehicles