The recession had a huge effect on the used-car sector in Cape Town, forcing many operations to close down, but sales are now showing signs of recovery, say most dealerships.
Charles Stuart, sales manager at Auto Select Cape in Goodwood, says there has definitely been a turnaround in the motor industry since the recession of 2008/09.
He says sales of lower entry vehicles (under R100 000) have picked up substantially.
Cars going for more than R100 000 take a bit longer to sell, averaging between 30 and 60 days depending on the popularity of the vehicle.
“The Consumer Protection Act has also helped a lot in sales because consumers now have peace of mind. I think the stock quality has also improved because most dealers don’t want to have hassles later,” Stuart says.
People are also going for more fuel-efficient cars such as diesel models.
Fuel-guzzling V6s and V8s take longer to sell, averaging between 90 and 120 days.
Stuart says holidays such as Easter and Christmas are popular periods when consumers look to buy specific vehicles to go away in, such as four-wheel drives, mostly diesel models.
Tony Mosca, sales manager at Imperial Select Parow, says the used car business has picked up since the beginning of 2011, but factors such as petrol hikes are influencing people to downgrade.
Consumers are trading in bigger vehicles for smaller, fuel-efficient ones, says Mosca.
“The average selling prices are between R80 000 and R120 000 with repayments of about R2 500, excluding insurance.”
TOUGH TIMES
Joyce Everts, business manager at Liebenberg Auto in Goodwood, which specialises in light commercials and off-road vehicles, also says business has improved lately.
“In the past five months the market picked up dramatically, from the end of 2011 up to now.
“It might be because of our stock-pile. We specialise in the bakkie and 4x4 market.
“There was an increase in units sold from mid-2011 until now, whereas in the more average months we did about 15 units.”
The company had tough times during 2010 and the first half of 2011 in terms of getting applications approved through the banks, because many people did not qualify.
BOTTLENECK EFFECT
Dealer principal Christo Liebenberg says it is now easier for his business to sell cars because there are more buyers in the market than there is stock.
He says the National Credit Act has caused a “bottleneck effect” because it allows debt-stressed consumers to apply for debt review in order to keep their vehicles.
Everts adds that the rehabilitation period of the person under debt review is about five years or until the credit record is clean.
“That results in the buyer not being able to buy again until the rehabilitation period is over. Because of debt review customers, the bank is stricter on credit criteria.
“The bank suffers a bigger financial risk should the customer apply for debt review.”
KEEPING THEIR ASSETS
In some instances, Everts says, the debt counselling process is positive because consumers in financial difficulty have the opportunity to increase their living standards with their current earnings and keep their assets.
However, Robbie Starke, general manager of the Independent Dealer Association, says that although there has been an increase in sales in the past year, things have not improved as much as some businesses had hoped. Sales of used vehicles in the Western Cape have not fared as well as those in other regions such as Gauteng.
The IDA has 89 members in the Western Cape and they have to conform to the association’s code of conduct.
“In the used vehicle sector at the moment, when the interest rate goes up it is good news for the used car industry.
“For every new car sold, two used cars are sold.”
“If the interest rate goes up, the ratio could increase to three used vehicles for every new one.”
Starke says consumer complaints have increased since the CPA was introduced in 2011 because consumers are more aware of their rights.
The association mediates in disputes weekly. This may sound negative, he says, but it’s good for consumers because they’re more informed about their rights than they were. - Cape Argus