Content State of Motor Industry

Disrupted state of The Motor Industry

2 August 2021

Content State of Motor Industry

Disrupted state of The Motor Industry - Get a Dekra report.

Since the advent of the COVID-19 pandemic, economic uncertainty has been a growing concern on all domestic economic fronts. The motor industry has not been exempted from the rollercoaster ride, which is corroborated by the Transunion Q2 2021 Vehicle Pricing Index:

  • Lenders are financing 2.67 used vehicles for every 1 new vehicle purchased.
  • New vehicle pricing decreased from 6.5% in Q2 2020 to 6.1% in Q2 2021.
  • Used vehicle pricing increased from 1.6% in Q2 2020 to 4.9% in Q2 2021.
  • There were 28,972 new vehicles financed in Q2 2021 vs 77,340 used vehicles financed in the same period.

With the rising costs of new vehicles and Job security uncertainty, used car sales are set to soar.

South Africa's economy is weathering the storm of the ongoing COVID-19 pandemic with intermittent lockdowns, exchange rate volatility and the added complexity of domestic political unrest adding to the fray. It is no surprise that the used vehicle market is receiving more attention than the new vehicle market as consumers hunker down amidst enormous economic and job uncertainty.

The impact of the Rand has played a significant role on the new vehicle industry as the volatile exchange rate during the onset of the pandemic had a major impact on new vehicle pricing. The fact that new vehicle pricing has decreased in comparison to the exchange rate, means that new vehicle manufacturers had to stabilise pricing and are not recouping the increased cost, which paints a dire picture of the motor vehicle manufacturing industry. In comparison, the used vehicle market has not been affected by the exchange rate in quite the same way, as the cost lifecycle of used vehicles is further down the line. It may, however, have an effect in the future, but that remains to be seen.

Government imposed lockdowns have also not been kind to the motor industry, adversely affecting material aspects such as the ability to offer car services and the availability of vehicle parts, especially those that need to be imported. Customers were also not able to physically browse car lots to purchase a vehicle, which in turn created a boom for online platforms selling new and used vehicles.

Political unrest also recently erupted into violent and destructive protest action in a wave of riots and looting, majorly disrupting supply chains, especially in and out of KZN, South Africa's busiest port. The effect on the motor industry's supply chain is still reverberating through the country, affecting new car sales and the availability of vehicle parts in a big way. It has added another layer of complexity to an already strained environment.

Used motor vehicle dealerships in South Africa have the opportunity to do what's right for buyers and sellers with a DEKRA report.

In a bid to tighten budgets amidst ongoing economic uncertainty, consumers are opting for used car options as opposed to purchasing a new car. This is where a DEKRA report comes in handy for both the buyer and a seller of a used vehicle. The value of such a report lies in the fact that the vehicle has been independently inspected by an expert that has no bias towards the seller or prejudice towards the buyer. It simply provides an impartial and technical report on the actual condition of the vehicle so that the buyer can make an informed decision with no surprises waiting for the new owner once receiving the keys.

More about DEKRA South Africa

DEKRA Automotive Pty Ltd commenced operations in South Africa on 1 October 2008 and is a joint venture partnership with DEKRA Germany, a market leader in the supply of roadworthy certificates and technical checks - the DEKRA seal - and is present in 19 countries worldwide.

DEKRA is known for its highest standards of quality, the level of expertise of its employees and the fact that once DEKRA places its name on a product; be it a roadworthy or safety certificate, the DEKRA name is completely trusted.

We believe this knowledge and awareness helps to build safety for motorists and the community, and above all, the preservation of human life through the delivery of quality products.

We have nationwide branches to assist you where it is most convenient.