A new report by Lightstone finds the Western Cape – specifically in Cape Town – to be the cheapest province in South Africa when it comes to buying cars.
Lightstone, a provider of data, analytics and systems on property, automotive and business assets, noted that stock availability, market competition and population density (which allow access to a wider consumer base in the various provinces) are among the factors that have an effect on the prices consumers end up paying for vehicles.
Paul-Roux De Kock, head of analytics at Lightstone, said “The increased number of car dealerships and stock availability in SA’s biggest provinces can drive down prices as dealers offer better deals to compete for the business of potential buyers.”
He said that Gauteng caught up to KZN and is now jointly the second cheapest province to buy cars in, with prices 0.4% lower than the national average.
The Western Cape remains the cheapest with 0.6% below the national average.
“City of Johannesburg also moved up from being the 10th cheapest municipality to buy second hand cars. Vehicle prices in this municipality are currently 2.1% below the national average.”
“In the less competitive markets, the motor dealers will be less likely to offer competitive deals – such as in the Blue Crane municipality where vehicles are being sold at 5.1% above the national average,” De Kock said.
New vehicles are generally sold at the manufacturer’s specified price – irrespective of location.
However, for second hand vehicle prices, they are not only determined by car specific factors like mileage, condition etc. but also by market supply factors like the stock availability of the vehicle in the area, as well as the demand for the type of vehicle.
With vehicle prices fluctuating from province to province, it is essential that insurers are tracking these types of trends to better serve their clients, Lightstone said.
“Innovative insurers are already starting to incorporate location specific and geo-demographic factors in their rating engines and we expect to see more of this going forward. We might even see insurers of the future building customised products that will offer higher/lower pay-outs on claims dependent on where you live,” De Kock said.
“With vehicle prices in the City of Johannesburg being 2% cheaper than Tshwane, it could be incentive enough for someone in Pretoria to drive the +-50 kms to buy the car in JHB.”
“To put that into perspective, that’s a saving of R4 000 on a car that’s worth R200 000. Including the petrol and tolls to drive from PTA to JHB and back again it will most likely still result in a nett saving” the analytics head said.