Now is the time for new wheels as used car prices drop

After a recent increase in both price and demand, a new survey has revealed that used car prices in South Africa have started to drop to pre-pandemic levels.

New vehicle constraints starting to ease

Buoyed by not only the pandemic, but also the global semi-conductor shortage and stock constraints that crippled the new vehicle markets throughout much of 2022, prices for used vehicle dramatically skyrocketed for the first time in over decade.

Since the latter stages of last year though, matters have started levelling out as supply shortages get fewer and more vehicles arrive, with the knock-off effect of used vehicles becoming less in-demand.

“Only now are like-for-like price levels returning to near their pre-Covid levels. That doesn’t mean your car is worth the same today as it was when Covid hit – you would have been adding mileage, which adds another layer of depreciation,” Chief Financial Officer at Cape Town-based car dealership and warehouse, GetWorth, Colin Morgan said.

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“The return to the old price trends does have implications for consumers. During the post-Covid period, people got used to the idea that cars retained high levels of value, or even increased in price.

“Someone could buy high, finance a car with a big balloon payment, and still have equity left over when they sold the car a year later.”

Caution still required

He also stated that buyers thinking of upgrading to a new car should still be vigilant as the days of “flipping-for-a-profit” need to be looked at with caution despite the market appearing favourable.

“We use our tools to trade every day in the live market and we have more than 350 cars on our floor, so we can see these forces playing out in the real world.

“We have to adjust our prices continually to make sure our buying offers and our cars for sale are attractively priced.”

“It’s turning into a buyer’s market. It is a good time for those updating or upgrading their cars, as there are attractive deals available,” he concluded.

More information on GetWorth can be obtained by here or by phoning 021 126 0300.