It’s beginning to look like a seller’s market in the second-hand arena, with an acute shortage of stock helping to boost prices of second-hand cars between five and six per cent over the last three months, according to Burchmore’s Car Auctions boss Daryl Jacobson.
It’s beginning to look like a seller’s market in the second-hand arena, with an acute shortage of stock helping to boost prices of second-hand cars between five and six per cent over the last three months, according to Burchmore’s Car Auctions boss Daryl Jacobson.
Sellers used to be hesitant to sell their cars on auctions, which have been up to now been regarded as golden opportunities for bargain-seekers. But, according to Jacobson, this trend might be coming to an end.
“Bidders used to get second-hand cars at prices way below the retail or even the trade values, but this is certainly not the case any more,” he said. “Anyone who intends to sell his car this year should consider the auction route. Although auctioning has presented a hassle-free way of selling a car, it now also holds profit-making opportunities.”
The increase in second-hand car prices was evident over the last three months and, according to Jacobson, many factors contributed to the rise in Burchmore’s prices. “The biggest reason behind the increase is a massive stock shortage,” he said. “The demand for decent second-hand cars exceeded market availability, which resulted in a scarcity of second hand cars.” And, as we all know, scarcity and price increases go hand in hand.
"We have noticed over the last few months that the current shortage in good used car stock has lead to higher prices being paid at the various auction houses,” said Martin Loock, the general manger at Wesbank. “We also believe that the increases in new car prices, coupled with the strong possibility of an increase in interest rates, will ensure that the demand for used car stock is maintained. This demand will see higher prices being paid for cars sold at auction houses."
Stannic managing director, Dipak Patel, shared Loock’s point of view. “The current macro-economic environment (rising interest rates), as well as automobile price increases already announced and those expected, will result in greater demand for used cars,” Patel said. “Burchmore’s ensure that Stannic and other financial institutions recover as much as possible in the event of bad debt accounts. This ensures our own profitability, as well as reduced provisions for bad debt”.