Every car on the South African market has a trade-in value, i.e. “book value”, which is an accurate value that a dealer will likely be prepared to pay for that car when an individual trades it in.
This book value is determined by using past sales data, and it is published by TransUnion in its Auto Dealers’ Guide.
Book value
Head of auto information services at TransUnion Africa, Kriben Reddy, explains that the company gets the information for the Guide from two main channels, the first being unique “M&M codes” that are given to every range of vehicles coming into the country.
When a certain model is coming into South Africa for the first time it is given this unique code which denotes its sticker price and specifications, and the code is distributed to a range of dealers.
From the first day forward, the M&M code tracks all records of all cars with that particular code, whether they are being sold, bought, financed, written off, or stolen.
As such, the M&M code shows what an average vehicle of that year and type, in an average condition, with average mileage, will likely be traded in for.
The second source of information comes from dealerships, auction houses, and vehicle traders themselves.
These companies report the sales they make along with the exact VIN numbers, and TransUnion aggregates the data and combines this with the M&M records to make the book value more accurate.
The book value is then usually issued after a model has been on the market for at least one year, though TransUnion is looking at ways of getting this down to six months, said Reddy.
To determine what is reasonable to pay for your car when you trade it in, a dealer will take the book value and adjust the price based on multiple factors, including but not limited to the vehicle’s age, mileage, condition, and optional extras – all of which has indicative values in the Dealers’ Guide.
Now, after 62 years, TransUnion has digitised its Dealers’ Guide with the goal of making the above information, and other important points, more attainable for dealers and the average person, while removing many of the unexpected challenges that came with human error when reading in data manually.
Through TransUnion’s “1Check” app, powered by the Guide’s information, dealers can now scan a vehicle’s licence disc to see the book value, trade-in value, its specifications, its insurance claim history, any reports of theft, whether it’s still under a finance agreement, and more.
With the “FirstCheck” App, everyday consumers can also get access to this same data for extra peace of mind whether buying or selling a car, although the service comes at a price of between R19-R99.
“[The Guide] is linked to 56 car brands in the country, and provides access to a range of data points for every vehicle in South Africa, including the respective VIN numbers recorded for the past 25 years,” said Reddy.
Mobility megatrends in South Africa
There are currently four “megatrends” emerging in the South African automotive sector, namely connected vehicles, autonomous vehicles, shared mobility, and electrification, said Reddy.
He said that of all the finance agreements that are approved by local banks, only about 15% of the applications are taken all the way through. In other words, of all the potential car buyers that have been approved for finance for a specific vehicle, only 15% actually go through with the purchase.
This shows that there is a “strong intent for mobility” in the country, but a lack of ability to execute. This can be for various reasons, said Reddy, be it high interest rates, excessive monthly payments, lengthy agreements, and more.
Building on this intent is the fact that the average duration of vehicle finance agreements has risen from 40 to 72 months over the past few years.
As such, these “megatrends” are emerging in order to get people into vehicles and provide enough supply of mobility to satisfy the citizens’ needs.
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