Second-hand vehicles are growing in popularity

Over the last couple years car dealerships started seeing a slow decline in purchases. It seemed South Africans had lost interest in new vehicles and were opting for used vehicles instead.

According to the quarterly TransUnion Vehicle Pricing Index, second-hand vehicles have in fact become more favourable than new vehicles – particularly over the last five years.

The most recent report showed a slight inversion of this trend, but over the long term the interest in second-hand vehicles may continue to rise.

Ratio of new-to-used cars

Thembani Biyam, country manager at OLX South Africa, refers to the research done by TransUnion to explain the rising interest in used vehicles. 

He points out that by the end of 2017, South African financial institutions were financing 2.22 used vehicles for every new vehicle.

In its report, TransUnion explains that the demand for used vehicles will continue until their quality diminishes.

This year has seen only a small decline in consumers who are opting for second-hand vehicles.

For every new vehicle that had been financed, 2.09 used vehicles were being financed (refer to below infographic).

Why choose a second-hand vehicle?

Biyam believes affordability is the main driving force for consumers’ decision to choose second-hand vehicles.

“For a budget of R200,000, it’s possible to buy a second-hand luxury brand compared to a smaller engine and fewer features for the same price in a new vehicle,” says Biyam.

“The performance of the rand is also a significant factor, as about 80% of new vehicles are imported. Therefore, the currency has a direct impact on the pricing,” he adds.

Besides this, savvy car buyers are unhappy with potential tax increases and new vehicle depreciation. New vehicles lose 5-10% of their value the moment they leave the showroom floor.

“Value for money also comes into play in terms of insurance, which is less for second-hand cars due to the lower replacement value,” says Biyam.

Which second-hand cars are popular?

He explains that the maintenance plans and manufacturing quality have improved over the past ten years, so buyers can enjoy their pre-owned vehicles with more peace of mind.

“Six out of the ten most popular vehicles on OLX last year were larger vehicles which speak to the needs of growing families. Therefore, peace of mind is crucial,” says Biyam.

Below is a list of the most popular cars on OLX in 2017, and the average price each one was sold for:

How to buy a second-hand vehicle

South Africans have several options when it comes to buying second-hand vehicles. Have a look at the following sites to find the right second-hand vehicle for you:

• OLX
• Gumtree
• We Sell Cars

Although it might be tempting to jump in and buy the first vehicle you find, Biyam recommends doing a little homework beforehand:

• Get your budget in order: Use the AutoTrader Finance Calculator to get an idea of what kind of repayments to budget for.
• Know the service history: Once you've found the car you like, always ask for the complete service history.