AutoTrader’s search data from the first and third quarters of 2022 shows that the used-vehicle segment continues to enjoy fervent demand from car buyers.
Interest in used cars has driven up prices, seeing the average list price of a pre-owned model on the classifieds platform rise by over 10% from R386,682 in 2021 to R427,290 in 2022.
However, while demand has been thriving, supply has been doing the opposite, according to AutoTrader CEO Georgie Mienie.
The seven vehicles which received the most inquiries on AutoTrader remained the same between Q1 and Q3 2022, but stock levels for these models have changed dramatically over the same period.
“Supply of the country’s best-selling passenger used car, the locally-produced VW Polo Vivo, has halved, while the second-biggest drop in supply in used cars has been the BMW 3 series (33%), followed by the locally-built Mercedes-Benz C-Class (17%) and VW Polo (16%), and imported VW Golf (11%),” said Mienie.
In contrast, stock levels of pre-owned South African-built bakkies increased, that of the Toyota Hilux shooting up by 18% and the Ford Ranger by 3% between the two periods on review.
The bubble is about to burst
Used car prices have been soaring for the past few years due to supply-chain snarls and component shortages wreaking havoc on new-vehicle supply.
However, according to Mienie, this bubble in the used-car market could burst in as little as one year, provided it’s subjected to “the right economic demand and supply conditions.”
Despite buyer interest in pre-owned vehicles being at an all-time high, several local and international indicators point to a drop in consumer purchasing power over the coming months which will lead to lower demand for cars across the board.
“Locally, rising interest rates and inflation, and spiking fuel prices are likely to dent demand. With the cost of living continuing to rise, consumers are feeling the pinch,” said Mienie.
“What’s more, while South Africa lags overseas trends there are worrying indicators emerging abroad, not least of which is a drop in used car price inflation and concerns around the car loan debt market in the United States (US).”
He notes that if chip shortages and supply-chain issues are ironed out in the near future and new-vehicle supply starts to recover, the pre-owned bubble “could burst in the next 12 months.”
Keyword: Average price of a used car on AutoTrader – 2021 vs 2022