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New cars not 'worth it' in SA

2014-06-03 14:41
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NOT ALL DOOM AND GLOOM: It's expected South Africa's vehicle exports will benefit from growing international markets during the second half of 2014. Image: AFP

DUNCAN KIPLING

CAPE TOWN - Year-on-year South African new vehicle sales declined by 9.2% in May 2014, the National Association of Automobile Manufacturers of SA (Naamsa) said on Monday (June 2 2014).

Wheels24 reader JANNEMAN POGGENPOEL lists six reasons why South Africans are not buying more cars:

1 For starters, I can buy an exported vehicle manufactured in SA, for less overseas than I would locally.
2 Year-on-year price increases are way above inflation.
3 Vehicle prices are preposterous if you compare it to other countries, with the excuse that our vehicles have way more equipment etc.
4 Interest rates put vehicle ownership out of the reach of most SA people.
5 Dealers add a lot of 'administration' costs on top of the vehicle purchase price which is just plain greedy. This is purely to cover the costs of an over-bloated staff compliment.
6 Lastly, don't forget you're getting peanuts for a trade-in.

The public is not that gullible anymore, we'd rather hang on to our current cars.

Wheels24 reader DUNCAN KIPLING responds:

I agree the cost of owning a new vehicle is not worth it if we are paying a premium for sub-premium after sales service. Most of the value is lost in the first two years of ownership.

If we compare our vehicles to overseas I still believe overseas buyers get a better deal. Why can’t South Africans buy an entry level vehicle and select which specification we want and adapt it into the overall pricing with minimal admin costs.

The vehicle industry profit model is based on low volume high price per unit  which is inherently severely impacted by market conditions because of the low sales volume base.

Rather than economies of scale model of high volume low price which falls on a higher volume base and less susceptible to negative market conditions. 

More reader articles:
6 reasons why South Africans aren’t buying cars
Reader: Why South Africans aren't buying cars
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Read more on:    naamsa  |  cape town  |  new models  |  car sales

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