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Reader: Why South Africans aren't buying cars

2014-06-03 13:37

Frank Swanepoel

CAR SALES PLUMMET: Car sales in South Africa took a turn for the worst in May 2014. Cape Town CBD Image: Wheels24/Marcel Trout.

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).

Naamsa said: "The South African economy is losing momentum and risking moving into recession.

"The decline in first-quarter GDP to negative levels, the dramatic decline in the purchasing managers' index... the sharp rise in producer inflation and the worsening trade deficit all confirm the advent of a more difficult economic environment."

Wheels24 reader JANNEMAN POGGENPOEL lists 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.

Click here to read Poggenpoel's full article

Wheels24 reader Frank Swanepoel responds:

1 Why not buy a vehicle overseas and see what you pay for the import duties and other taxes? Also what warranties and service plans are part of your overseas price?

2 Maybe its the bigger brands that only import but most manufacturer increases are about 2-4% the past three years already.

3 This is a duplication of point 1 above. Again, most vehicles sold overseas are stock. Maintenance plans, aircon and leather seats  are all add-ons in the overseas market. Tax also plays a huge part in the difference.

4 Interest rates are in the hands of the banks not the dealerships, there is risk involved in financing a depreciated asset, thus higher interest.

5 The admin of getting your vehicle to you. I do agree that some dealers have outrageous fees but again most are truly just to cover the costs involved in delivering the vehicle.

6 Prices for trade-ins are done on a supply and demand principle. Most vehicles lose about 20-30% in value as soon as it leaves the dealer floor. This again is not in the hands of the dealer but the customer.

If a client buying a second hand vehicle wanted to pay full price for the vehicle you will also receive a better trade-in. There are also risks involved when trading in the vehicle. A dealer doesn't know how long it is going to stay on the floor and there are costs involved in having a vehicle on your floor that also has to be recouped.

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