For the first time in 9 years it was announced last week that South Africa is in a technical recession and many have reacted with alarm and panic to the news. However, when it comes to the automotive industry specifically, this is not just a doom and gloom scenario.
The technical recession could actually present a unique opportunity to the used car buyers right now. That is according to AutoTrader CEO George Mienie, ‘’We’ve seen that used car prices only increase about six months after new cars. Accordingly, if new car prices rise by 10% within the next month or two, used car prices will only rise by the same percentage about six months later. This means that used car buyers can get good value in the used car market right now. This is especially the case in top-end cars (vehicles costing over R500 000),” he says.
Original equipment manufacturers (OEMs) could also benefit from this situation. “We have a large and vibrant vehicle manufacturing industry. Companies such as Nissan, BMW, Ford, Isuzu, Mercedes-Benz, Toyota and Volkswagen all build cars here. Vehicle exports are predicted to grow to 384 000 units next year (from an expected 340 000 this year), and a weaker rand is obviously good news for exporters,” he explains.
Last month (August), vehicle exports rose by 7.7% over August 2018 – versus a 2.5% decline in domestic car sales.
Mienie explains that local component manufacturers that are exporting will also benefit from the weaker rand. “We have a strong component industry here in South Africa. Catalytic converters have typically been the number one export (catalytic converters to the value of R18.7 billion were exported last year) but engine parts, tyres and engines are exported too,” he reveals.
Finally, while Mienie understands the concern surrounding recent developments, he says that both motorist and the motor industry will survive the current crisis. “The simple fact of the matter is this: South Africans rely on cars, buses and taxis for mobility. We don’t have a widespread train or tram network. Maybe we will need to tighten our belts and purchase used cars (instead of new) or we will have to buy down. Maybe we will need to hang onto our vehicles for longer (which will have positive spinoffs for service stations). Maybe motorists will buy cheaper cars (that emanate from China). But one thing is clear: South Africans will always need wheels,” he concludes.
Provided by AutoTrader
