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Thursday / 20 June 2024
HomeFeaturesGoodbye banks – South Africans are using new ways to buy cars

Goodbye banks – South Africans are using new ways to buy cars

An increase in car subscription and leasing services is expected to be one of the main trends in the South African automotive industry this year, according to AutoTrader.

These services offer alternative avenues for car ownership outside the traditional methods of paying cash or obtaining a loan from a credit provider such as a bank.

Leasing allows the consumer to drive a new vehicle every few years without the hassle of selling it, while car subscriptions take this business model a step further by also bundling insurance and maintenance costs into a single monthly fee.

“These financial models – which offer flexibility and convenience, with the added benefit of not having to commit to a long-term investment – are innovative alternatives to traditional car ownership,” said AutoTrader CEO George Mienie.

“As consumers seek more adaptable lifestyles, and as businesses look for ways to reduce fleet costs, these models could disrupt the traditional purchasing and financing structures during 2024.”

Leasing and subscriptions also allow a sizeable number of subprime consumers who may struggle to be approved for traditional financing to own a vehicle, in turn enabling them to be more productive members of the economy.

Several companies and businesses already provide such services in South Africa, perhaps the most notable of which are Toyota’s Kinto One and Avis’ iLease.

Earlier this week, GM of Sales and Marketing at Kinto One South Africa, Slade Thompson, said there are already in excess of 2,000 vehicles driving around on South African roads that were obtained through Kinto One since the product’s launch in mid-2022.

The overwhelming 90% of these subscriptions came from businesses with a heavy focus on small and medium enterprises.

“Our journey in South Africa mirrors the growing demand for flexible and hassle-free mobility solutions. With consumers and businesses alike seeking accessibility, affordability, and convenience, subscription vehicles have swiftly gained momentum,” said Thompson.

“This trend underscores a fundamental shift in mobility financing, as more people opt for subscription-based models that offer greater flexibility and control over their transportation needs.”

Automotive trends taking South Africa by storm

Apart from leasing and subscriptions, there are a number of other vehicle trends taking shape in the country’s automotive sector that are worth keeping an eye out for over the coming nine months.

Chief of which, AutoTrader expects online car shopping to boom in 2024 as more and more consumers strive for convenience, efficiency, and safety.

Annual visits to the AutoTrader website increased by 97% since 2019 with continued growth into 2024 showing a 4% jump of in-market car shoppers.

“The ability to research, compare, and purchase vehicles from the comfort of one’s home is not just a trend but a fundamental step-change in the car-buying journey,” said Mienie.

“Dealerships are responding to this trend by enhancing their online presence and offering virtual tours, online negotiations, and home delivery services. This is likely to accelerate as digital infrastructure improves and consumer trust in online transactions strengthens.”

AutoTrader additionally anticipates that there will be far more hybrid (HEV) and electric vehicles (EV) on South Africa’s roads by the end of 2024 than in the years prior, with this shift being driven by two elements.

The first is that prices for HEVs and EVs are continually dropping as battery tech improves, they are becoming increasingly available as more automakers enter the segment, and there is a rise in motorists actively looking for ways to reduce their individual carbon footprints.

The second is that sustainability has taken a front seat in vehicle production and South African manufacturers are accelerating green practices and decarbonisation.

With this in mind, it is also expected that the vehicle servicing industry will take a hit in 2024 as HEVs and EVs have different maintenance needs than petrol and diesel autos, which will require companies to adapt and upskill their workers to stay competitive.

Recently-launched GWM Ora 03 – South Africa’s most affordable EV at R686,950

Shared mobility is another form of transport South Africans will start relying on more frequently in 2024, predicts Mienie.

Shared mobility refers to ride-hailing apps such as Uber and Bolt, or car-sharing platforms including Mini Sharing.

“In South Africa, where urbanisation is increasing, shared mobility offers a convenient and cost-effective alternative to owning a car,” said the AutoTrader CEO.

“This opens up new opportunities for automotive companies to diversify their services.”

Finally, increased customisation and personalisation will be a main theme in the coming year especially in the premium segment, motivated by the desire for a unique driving experience and the availability of advanced manufacturing technologies such as 3D printing.

“Automotive companies in South Africa can leverage this trend by offering more personalised options and features for their customers,” concludes Mienie.

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