Auction houses are emerging as a new avenue for consumers to purchase the country’s most popular cars at a potentially better price.
In the Covid-19 era, many individuals took advantage of the low interest rates of the time to purchase new vehicles, often ones they would not have been able to afford had it not been for the favourable lending terms.
However, due to constrained stock levels at the time as a result of global lockdowns that complicated the movement of goods around the world, coupled with a semi-conductor shortage in nigh every industry that used them, new vehicles were not always readily available, while those on the pre-owned market went for far above their retail values.
Be that as it may, consumers wanted new cars and they wanted it now, and they were willing to pay the premium to get them as the low interest rates at the time meant they were still relatively affordable when paid back on a monthly basis.
Market conditions have deteriorated significantly since then and in an effort to contain inflation, the Reserve Bank rapidly increased interest rates to historically high levels.
The country simultaneously experienced a cost-of-living crisis for much of the last few years driven by exorbitant fuel prices, record levels of load-shedding, and geopolitical headwinds.
As a result, many consumers can no longer afford the cars they once could, and what they owe is still more than its market value, consequently, they have fallen into arrears with their credit providers, leading to an increase in vehicle repossessions.
These vehicles, often recent, low-mileage models still in good condition, are now finding their way into auction houses as banks dispose of them to make up for lost income.
Vivos and EcoSports priced to go
Clive Lazarus, Director of Park Village Auctions, highlighted that the auction house has seen a surge in popular passenger cars rolling across its blocks, with the company to host four sales this month all filled up with beloved models.
“Popular passenger vehicles, including various Toyota, Suzuki, Ford, and Volkswagen models, from SUVs to entry-level hatchbacks, will grace the auction floor,” said Lazarus.
“As most assets stem from repossession, business rescue, or liquidation matters, buyers can expect to find fairly new vehicles with relatively low mileage.”
Lazarus said Park Village Auctions has seen the hammer fall on many VW Polo Vivos, Ford EcoSports, assorted Suzuki, Hyundai, and Renault cars, as well as sought-after bakkies in recent times.
“I am confident this trend will continue with these November auctions,” he said.
While bargains can be found, those considering going the auction route must heed the risks of doing so.
If the hammer falls on your bid, you must have the money to pay up right then and there, or the sale could be cancelled and you will lose your deposit.
At most auction houses, other costs must also be accounted for over and above the figure you bid such as buyer’s commission and VAT, which can tally up to a considerable extra portion.
Cars are usually also sold as “voetstoots” and you don’t get to test drive them before putting down the money, meaning that if you’re unhappy with what you got after the sale or something goes terribly wrong with the vehicle, you have no avenue for recourse against the auction company and must sort out the issues yourself.
Popular automaker Suzuki also advises that buyers always question how a vehicle landed up at auction, as it is sometimes the last place to sell cars that cannot be sold elsewhere.
“Sellers could go to great lengths (and some do) to hide flaws and make the vehicle look desirable, so even though the vehicle may look shiny and new it may not be in good mechanical condition,” said Suzuki.
“You are buying with your eyes and do not get to feel how the vehicle drives.”
Join the discussion