Car owners in South Africa facing a perfect storm

The buzzword within the automotive industry right now is fuel, says George Mienie, the chief executive officer of AutoTrader, a vehicle market in South Africa.

“The topic is very much on the minds of motorists as they brace themselves for further shocks at the fuel pumps while also pondering the merits of moving away from internal combustion engines either partly or completely,” he said.

Mienie’s comments come in the form of a ‘foreword’ contained in the 2022 AutoTrader Mid-Year Car Industry Report, published this week. He said that the report pointed to an increased propensity of fuel-related searches and increased traction for electric vehicle (EV) production and adoption in the country.

“Consumers are facing a perfect storm: out-of-control fuel price increases are going hand-in-hand with challenging macro and socio-economic circumstances, meaning that they have less disposable income,” said Mienie.

Simultaneously, continued supply chain difficulties have restricted new vehicle availability, increasing demand and therefore prices within the used car market. As a result of these shifts and the increased need for transparency, consumers are buying and selling cars differently, he said.

On the rapid increase in attention towards electric vehicles in recent months, Mienie cited data from the International Energy Agency, showing that global sales of electric cars including fully electric and plug-in hybrids doubled in 2021 to a new record of 6.6 million, with more now sold each week than in the whole of 2012.

“And we’re seeing the move to EVs here in South Africa too,” he said. This is confirmed by our data; EV searches – not by fuel type but searches of the available models – have increased is the changing car shopper needs.

 

Fuel economy is a major consideration for in-market car shoppers. However, current market conditions have forced car shoppers to consider fuel efficiency and how it influences the cost of running a vehicle as a new top priority, said Mienie.

Globally, the price of fuel has led to significant changes in car shopping behaviour surrounding new energy options. A primary indicator of this change can be observed in fuel-type searches, the chief executive said.

2022 has seen a 27% increase year-on-year of car shoppers utilising the fuel-type filter. In previous years, fuel type was a secondary search filter with it predominantly being used when car shoppers were considering bakkie body-type vehicles, according to AutoTrader.

“What has been interesting is the increase of the various fuel types. Whilst petrol and diesel respectively receive the highest fuel-type searches, they’ve also grown at the slowest rate. In fact, they have grown slower than the site average of all fuel-type searches,” said Mienie. In 2022, petrol and diesel searches increased by 26% and 24% respectively.

Regarding new energy fuel types, hybrid and electric fuel-type searches are where car shoppers are showing the largest amount of consideration, the chief executive said. He stressed that this is from a much smaller base than the traditional fuel types of petrol and diesel. In 2022, hybrid and electric fuel-type searches increased by 129% and 100% respectively.

Big shifts

According to insurer, Naked, motorists in South Africa are not yet at the point where they’re making significant shifts to combat the growing cost of owning a car – such as downgrading vehicles or selling the family’s second car – but there have been some changes as drivers try to cope.

  • Car owners are simply driving less or making efforts to cut their time on the road;
  • New car buyers are buying cheaper vehicles;
  • When taking out car insurance, drivers are opting to risk a larger excess payment to keep monthly premiums low.

Naked said that most passenger vehicles can be broken down into five categories:

  1. Traditional good value-for-money cars (Toyota, Volkswagen, Ford, Mazda and Nissan)
  2. Higher-end vehicles (BMW, Mercedes, Audi, Lexus and Volvo)
  3. Established European value-for-money cars (Renault, Fiat, Citroen and Peugeot)
  4. Emerging value-for-money cars (Suzuki, Kia, Daewoo, Chery and Mahindra)
  5. Other (niche).

“The first group makes up around half of the cars people are buying and insuring. However, the fourth group has increased from roughly 20% to 26% of the cars Naked customers are insuring. This shows consumers are increasingly comfortable trusting a new set of brands in their quest for value for money,” it said.


Read: More good news on the horizon for motorists in South Africa

 

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Car owners in South Africa facing a perfect storm