While South Africa’s new vehicle market has taken a battering since COVID-19-related restrictions were first imposed in late March, the country’s larger used car market has faced its own challenges — but is now showing signs of revival.

This emerged from the insightful and latest used car Rate of Sale (ROS) measure used by the industry to gauge the period of time a vehicle stands on a lot before being sold.

VW Polo Vivo the fastest mover off sales floor

The latest figures, based on June sales, placed the Volkswagen Polo Vivo in first position as the fastest mover in that month.

With financial factors having traditionally played a strong role in private consumers’ decision to purchase a new or used vehicle, the overall automotive retail industry has historically see-sawed in favour of new or used vehicles in tandem with economic conditions at the time.

The surprise pandemic and the accompanying Level 5 lockdown, has however impacted particularly heavily on many used car dealerships, which have been compelled to face additional challenges, such as stock management and protection, under the lockdown.

‘Cautious optimism’ for SA used car market

But there is now light at the end of the proverbial tunnel for the formal second-hand car market, with AutoTrader – the country’s largest digital automotive marketplace – on Wednesday expressing “cautious optimism” around the South African used car market going forward.

Highlighting a number of positive trends in the used car sector, AutoTrader chief executive George Mienie said there was now “reason for cautious optimism”.

“Prices have begun to increase – albeit slightly – while cars are also selling faster than experienced earlier this year. Both of these factors bode well for the used car market,” he noted.

Mienie was making direct reference to AutoTrader’s Used Car Rate of Sale (ROS) indicator, which has just been released for the period ending June 2020.

As a dominant participant in the country’s digital vehicle trading space, AutoTrader lays claim to being able to provide “unparalleled insight into car-buying patterns in the country”.

Volkswagen and Toyota ahead of the pack

The ROS indicator specifically provides an understanding of which cars South Africans are purchasing the fastest.

“According to this data, the fastest-selling used vehicle in South Africa at the end of June was the Volkswagen Polo Vivo, which took a mere 25 days to sell. This confirms the popularity of the Volkswagen brand yet again. It was also the most sold brand last month,” revealed Mienie.

Toyota came in a close second and third on the indicator with two of its larger models.

“Toyota was the second most sold brand last month and so it wasn’t surprising to see two vehicles from that manufacturer complete the podium positions. The Fortuner was the second-fastest selling vehicle last month with a ROS ranking of 26 days, followed by the Hilux, also with a ROS rating of 26 days,” Mienie noted.

In terms of the rankings and where vehicle models appear to share the same ROS, AutoTrader notes that models that tied in days have been ranked by the lowest average individual time to sell a model.

Additional positive trends

Pointing to additional positive trends, the CEO said AutoTrader’s Retail Price Index (RPI) showed a 1.2% increase (month-on-month) in prices in June.

“The average selling price of a car for the month of June was R274 221. This is a small increase, but it is positive news for retailers indeed. It also means that demand for used cars continues to rise,” he said.

“Consumer propensity for increased spending albeit on used cars, is always a good thing for the automotive industry as a whole as we know the used car market is a much bigger market than new in South Africa,”  concluded Mienie.

‘Boxing clever’

Echoing many of AutoTraders’ sentiments, Nelson Mandela Bay’s King Cars — which operates multiple dealerships — said the company had “opened strongly” following the easing of lockdown restrictions.

“We have had — and will continue — to box clever due to the pandemic and the strain the economy is under. While we opened strongly, we have yet to see the effects of that, but we are optimistic,” said Port Elizabeth-based dealer principal Derick Minnie.

He said stock (availability) was an issue and that this was reflected in the online auction market.

“But there is still business to be done. And again, it will be a matter of boxing clever to be successful under these market conditions,” said Minnie, adding that the optimal management of vehicle stocks was critical to the business.

Small car segment

Asked whether the bulk of the sales activity was in the entry-level or small car segment, Minnie said at this stage he was seeing a between 50% and 70% volume of sales going to the small car market.

“This is, however, naturally influenced by the stock we select to hold [for the sales floor],” he said, intimating that there would be risks involved in holding higher-priced stock which, under current conditions, could potentially stay on the sales floor longer.

“We have also adjusted the business to be 100% COVID-19 [regulations] compliant. This includes everything, from masks and sanitisation to who we allow on the sales floor. Children, for example, are not allowed on the sales floor, for both their protection and that of all our other customers and sales staff,” noted Minnie.

Devaluation lockdown issues

Questioned around the physical impact the Level 5 lockdown had on vehicles themselves, the dealer principal said that while he was pleased that there had been no major issues around this, there had been challenges.

“We employ security, which kept our vehicles safe as they stood during the lockdown. There were one or two issues with items like batteries, but nothing major on that front. But yes, due to the time span of the hard lockdown, there was concern around the devaluation of vehicles, but we have kept an eye on that,” he said.

Concluding, Minnie and also with respect to potential vehicle devaluation, said the situation could have been worse if he had stock such as a Porsche Cayenne, or similar premium-ticket vehicles on the sales floor at the time.

Fastest selling used cars (June 2020)

  • 1. Volkswagen Polo Vivo: Rate of Sale (days) 25
  • 2. Toyota Fortuner (26)
  • 3. Toyota Hilux (26)
  • 4. Volkswagen Polo (26)
  • 5. Nissan NP200 (28)
  • 6. Toyota Corolla Quest (29)
  • 7. Volkswagen Golf (30)
  • 8. BMW 3 Series (31)
  • 9. Ford Ranger (32)
  • 10. Ford Fiesta (32)
  • 11. Audi A3 (38)
  • 12. Renault Kwid (40)
  • 13. Ford EcoSport (42)
  • 14. Kia Sportage (44)
  • 15. Ford Figo (44)

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