The continued increase in used car prices in South Africa since the onslaught of the Covid-19 pandemic is starting to reverse, and prices for these vehicles are now starting to drop again, according to used-car platform getWorth.
The company said new car supply is on the road to recovery while simultaneously, the high fuel prices and increasing interest rates have had a knock-on effect on consumer confidence.
“This has caused the used car market to turn – prices are falling again,” said getWorth CFO Colin Morgan.
Live market trends
To reach this conclusion, the used-car platform’s pricing tools use live market data and software algorithms to “separate the effects of mileage and time to expose the real underlying price trends,” said Morgan.
“For example, the algorithm would be comparing the price of a 2018 BMW 320D Auto with 50,000km a year ago with the same car at 50,000km today – not one that has added an extra 15,000km.”
The below graph produced by getWorth’s pricing tool shows the like-for-like price trends for different price bands:
“One can clearly see how the normal falling prices reversed after the first Covid lockdown, and how the prices are turning again recently,” said Morgan.
Price levels remain high when compared to before 2020, meaning car sellers can still move units at higher prices, just not what they would have been able to do at peak.
However, it’s also good news for car buyers as they might now be able to afford a better used vehicle, or at least one in a better condition.
“Buying a pre-owned car remains a sound financial decision as the vehicles are much more affordable than the equivalent new cars. High interest rates make that a big factor,” said Morgan.
“With the market turning, sellers are no longer in the driver’s seat, but for car buyers there are good deals available.”
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