Mixed outlook for car market

In addition to a large number of genuine bank repossessed commercial and passenger vehicles, PVA was commissioned to sell a Lamborghini Gallardo Spyder, an Aston Martin, a Jaguar and a top-end Mercedes, all of which fetched “fantastic” prices, says PVA’s Clive Lazarus.

“Although our car auctions typically make for exciting events, the sale of luxury cars such as the Lamborghini and Aston Martin really gear the excitement up a notch. Unsurprisingly, we had a lot of interest in the cars which were sold to buyers on the floor. We also fielded a lot of interest from bidders utilising our online bidding platform which is gaining more and more users by the day,” says Lazarus

Despite a promising start to the year, though, Lazarus expects 2014 to be a fairly challenging year for both the new and used car market going forward.

“The National Association of Automobile Manufacturers of South Africa (Naamsa) expects only a modest uptick in new vehicle sales in 2014 thanks largely to higher-than-inflation car price increases stemming from a depreciating Rand. An unexpected interest rate hike in January (which may well be a precursor to additional hikes) the advent of e-tolls and petrol price increases may also hurt the car market this year.”

Putting the interest rate aspect into perspective, Econometrix director and chief economist Dr Azar Jammine recently noted that rising interest rates are bad news for the local new car industry as every 0.5% increase spells a 2% decline in vehicle sales.

Another factor which could affect the market this year is that the vehicle replacement cycle may have peaked. Industry observers believe 2013 represented the end of a cycle which saw consumers replacing their vehicles due to age or mileage.

For now, though, demand for used cars is fairly robust says Lazarus. He says this is positive for the new car market as demand for used cars typically translates into support for new cars as it enables trade-ins.

“No doubt 2014 will present its fair share of challenges. However, we firmly believe that our capabilities, coupled with limited supplies of certain in-demand models will work in the auction sector’s favour as the year progresses.”