According to statistics by Gumtree South Africa, the average price of used vehicles has gone up by 17.31%, from R178,911 to nearly R209,888, between May 2021 and May 2022.
According to Nunben Dixon, Head of Gumtree Auto, this is due to continuous supply issues exacerbated by the Russian-Ukrainian conflict as well as an increased demand for used cars from cash-strapped South Africans.
“Shortages for car parts have had a knock-on effect in the used car market. Dealers have low new stock due to supply chain issues which started during the lock-down and were put under further pressure by the recent conflict. Flooding in Kwazulu-Natal has also impacted many manufacturers and production in recent months.”
He says that shortages are expected - globally - over the next one to three years. “There’s a really high demand for used cars at the moment, and more options are available for private car owners that want to sell their cars, so we’re seeing a lower rate of trade-ins or even less desirable trade-ins coming into dealerships. In many instances, stock shortages mean that dealers can ill-afford to provide discounts and incentives to encourage new car sales,” he states. “However, this doesn’t mean dealerships are profiteering. Dealers are often selling used cars at higher prices because they need to spend a lot more to acquire those used cars in the first place. Trade auctions are becoming feeding frenzies and we often see dealerships purchasing cars from private sellers on our site to keep their showrooms stocked. Market value is extremely high at the moment.”
Dixon says that car owners may be surprised to see how much they can get for their cars at the moment. “We’ve heard from our customers that they are able to sell their car for a considerably higher price in 2022 than they were able to get in 2021.”
Dixon believes that both new and used car prices will start coming down within the next year or so. “While the Russian conflict threw a spanner in the works, car manufacturers are resilient and making plans to change the status quo. In the meantime, dealers should start thinking out of the box when it comes to acquiring stock. We’ve already introduced Whatsapp integration and saved search alerts that allow dealerships to respond to issues faster and find new stock from private sellers when it's listed.”
Dixon says consumers should combat the high prices by negotiating aggressively and ensuring that they purchase reliable cars with low maintenance and running costs. “Don’t cut corners by skipping services or delaying repairs as this will come back to bite you when you need to sell your car again and always negotiate when it comes time to purchase.”