October 2013 Buying and Selling Dealership

Johannesburg - South Africa has moved from a predominantly new to a second-hand car market in 10 years.

With new-car sales continuing to decline (617 000 new vehicles were sold in 2015 compared to 714 000 in 2005), used-vehicle sales continue to climb. According to Jeff Osborne, head of Gumtree Automotive, the ratio of new cars sold compared to used cars sold was roughly 0.5 used to one new in 2005 but has since risen to 1.7 used cars sold for every new car sold.

Economising might be a primary driver for the trend, said Osborne.

“The affordability and variety of the second-hand market, coupled with the ease of entry into private sales, are encouraging sellers to become their own brokers as it were, and dealerships are pushing used car sales to make up for the shortfall of declining new sales.”

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“Vehicle sales, both new and used, are a good indicator of the state of the economy. Credit health and gross domestic product growth are low and South African households are putting off purchasing new vehicles as a result.”

Overall, Osborne remains optimistic about both new and used car sales in South Africa.

“We have to remember that the country has enjoyed many positive new car sales years, which is why the figures seem grim. However, manufacturers and dealerships are becoming more innovative to ensure that the replacement loop remains active. Better deals, improved cars and other aggressive marketing initiatives will keep South Africans firmly in the drivers’ seat for years to come.”

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