Low interest rates benefited the new vehicle market notably more than used car dealers last year and the trend looks set to continue, Burchmore’s managing director, Darryl Jacobson, said.
Low interest rates benefited the new vehicle market notably more than used car dealers last year and the trend looks set to continue, Burchmore’s managing director, Darryl Jacobson, said.
By contrast to the new vehicle market, last year’s used car market was “slightly down” on 2002, Jacobson said. “Whereas the 2003 total new vehicle market was in fact the highest in seven years, the used vehicle market wasn’t nearly as buoyant.”
Jacobson attributes the slowing of demand to manufacturer incentives and aggressive marketing on the part of both the manufacturers and retailers of new vehicles.
According to him, the interest rate cuts also encouraged buyers to opt for new rather than used vehicles.
The only sector that saw used triumph over new was that of bakkies. While the sales of new light commercial vehicles only increased by 0,1 per cent, there was a high demand for bakkies in the used car market.
“This is indicative of the fact that business confidence improved during the year. As a result, there was exceptional demand for workhorses,” he said.
And while Jacobson was optimistic about the used car market, he predicted that it would be another difficult year.
“There are a number of factors which may impact negatively on our business in 2004,” he said. “The first is the stronger economy. When there is more money around, motorists don’t default on their payments. This means that there are fewer repossessions, which is a significant source of stock for auction houses such as Burchmore’s. Furthermore, more money means an increased tendency to buy new rather than used.”
In addition, the increased attention on vehicle affordability has prompted manufacturers to address this issue. “As a result, if the rand remains strong, we will not see significant new vehicle price increases this year,” commented Jacobson.
“This impacts on the used vehicle business in two ways. Firstly, if new cars are more affordable, motorists will go this route.
But one must not forget that used cars track the pricing of new vehicles – and this will also mean that used cars will represent better value than ever before. And hopefully this will bolster sales,” he added.
