Amidst the current global downturn, used car price inflation has slowed in South Africa.
Used car prices in South Africa rose by 2.4% in quarter three of 2019, declined to 2.0% in quarter four of 2019 and slowed to 0.9% in the quarter ending March 2020.
According to George Mienie, AutoTrader CEO, the reduction in the AutoTrader Retail Price Index (RPI) from 2.0% to 0.9% could be due to the looming national lockdown at the end of March 2020.
These figures are derived from AutoTrader’s quarterly RPI, which was launched last year and provides an overview of the latest live market pricing data as it relates to used cars in South Africa.
According to Mienie, AutoTrader is a sound proxy for demand, supply, and price in the automotive economy of South Africa. The RPI was created in order to shed some light on trends within the used car market. “The used car market dwarfs the new car market by at least 2:1. The RPI was introduced against a backdrop of one of the biggest automotive recessions that resulted in a 4% drop in new car sales in 2019 and a further swing to used cars. Analysts have flagged 2020 to be another difficult year in terms of new car sales. With the complexities of the difficult times we find ourselves in, a further swing to used cars is likely when lockdown lifts,” he explains.
“AutoTrader’s data has shown an increase in demand at levels not seen in 2020, during the last week of April. This could be an indicator of future sales and indicative of a swing to used cars. We have also seen an increase in search for cars under R200k - a potential indicator of consumers wanting to free up cash as they downgrade,” comments Mienie.
Mienie says that it will be interesting to see what the RPI reveals at the end of quarter two. “Will price inflation rise or drop? They could certainly rise as a result of the release of pent up demand and consumer appetite to trade down – meaning that right now is the very best time to buy a used car,” he notes.
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