AutoTrader has launched its new Price Ratings feature that tells interested buyers whether a used vehicle is priced low, fair, great, or high relative to similar cars on the market.
“Low” means it is priced abnormally low, “Fair” means it is in line with the market, “Great” means it is priced below the market but not suspiciously so, and “High” means it is at the upper end of the price spectrum.
There’s also a “no rating” classification, which only applies to vehicles that do not have sufficient pricing data such as rare or newly-released models, or those that have over 500,000km on the clock or are over 10 years old.
The tool depends on live market data and utilises an “industry-first machine learning algorithm designed specifically for the used car market in South Africa” to determine these ratings, said George Mienie, AutoTrader CEO.
As opposed to using historical records to gauge current pricing, this feature provides the average buyer more insight into real-time market fluctuations and trading conditions and therefore a better perspective into when the right time is to buy and sell.
“During times of market fluctuations, consumers can be understandably more cautious and dubious when evaluating the listed price of cars put up for sale. Last year, for example, demand for used cars drove up prices. The average list price of used cars for sale increased by 10%, rising from R386,682 in 2021 to R427,290 in 2022,” said Mienie.
“Price Ratings help shoppers easily evaluate the cost of a specific variant in comparison to similar ones that are in the market at the same time. Practically, this means it is much easier to evaluate the listed price of a car.”
Now just over a month after the feature went live, AutoTrader has crunched the numbers and found that a good 84% of the listings on its site either fall into the “fair” or “great” categories, under 10% are rated “high”, whereas 6% are “abnormally low.”
VW Polo Price Rating in detail
A good example of Price Ratings in action is the VW Polo, which is one of the best-selling cars in the country and the second most enquired-on model on AutoTrader in 2022.
The most-listed specification of the hatchback in February 2023 was the Polo 1.0TSI 70kW Life, which new currently sells for R379,200.
Of this specific variant, 4% were classified as “low” – ranging from R225,000 to R339,949 depending on the mileage and year model – and 90% fell in either the “fair” or “great” categories.
Great offers were priced between R299,900 and R379,950, while “fair” ones were between R313,900 and R422,950, again depending on the mileage and year model.
A further 5% had a “high” price, as they were listed between R389,900 and R489,500. The remaining 1% had “no rating”.
Mienie notes that certain examples that fall under “high” may have additional equipment or optional extras such as larger wheels, advanced driver assist systems, a sunroof, or cameras.
“This means that a ‘high’ price doesn’t necessarily mean that the car is overpriced but rather an indication to pay closer attention to the car features listed,” he said.
These intricacies are what the Price Ratings tool aims to simplify for everyday consumers who do not have years of experience and expertise in the automotive industry.
It is worth noting that the price category does not constitute a sure-fire bargain, and it’s always recommended to see the car in person first and take it for a test drive before making any financially-binding decisions.
Keyword: “Low, fair, and great” prices for a used VW Polo