Pre-owned vehicles in South Africa are now being listed for much higher prices than new ones.
This is likely due to the wide-reaching parts shortages and supply-chain constraints that have been hammering automakers since the start of the pandemic in early 2020.
These factors caused new vehicles to be sold without certain high-end features, factories to suspend production, and most importantly, a sharp increase in car prices in both the new and used markets.
Looking for an affordable crossover
We were recently approached by someone who does not care much for the intricacies of the car world, who asked for advice on an affordable pre-owned crossover as he just couldn’t find one.
He said he’s had his eye on a new Kia Sonet or Toyota Urban Cruiser for months, but complained these are sold out at virtually every dealership and pre-owned models are listed at hefty premiums.
We were surprised to find out just how right he was, with examples of a “pre-owned” Sonet EX with 410km on the clock being listed for 27% more than when it was “new”.
Although the practice of “flipping” cars is no strange occurrence, it was usually reserved for higher-end vehicles and not for the everyday crossover.
Apparently, now that’s changed.
Two years after the pandemic began, supply-chain disruptions and parts shortages are still running rampant.
In certain cases, this has led to new vehicles initially being delivered to South Africa in smaller batches and oftentimes selling out fast, such as with the electric BMW iX and Volvo XC40 P8.
Furthermore, manufacturers are receiving fewer units while orders are still piling in, causing long waitlists and growing backlogs for popular cars including the Toyota Corolla Cross.
The majority of the vehicles being imported are already spoken for, too, so only the rare demo model makes it to the showroom floor.
This unfortunate series of events has allowed a few used-car dealerships to take advantage by buying up new vehicles and selling them for much higher prices as “pre-owned” models with low mileage.
The main drawcard for these dealers is that you can get your car now without having to wait for an undisclosed amount of time, usually months.
Although these dealerships seem to be flourishing, the practice of flipping new vehicles has unfortunately seen some carbuyers paying much more than they should, and others buying a vehicle they don’t want as they can no longer afford the one they were saving for.
This can be detrimental both financially and emotionally.
On the other hand, used-car dealerships might not be completely in the wrong, as they also have bills and salaries that must be paid and they must now pay them by selling fewer cars.
These dealerships are severely affected by low stock levels because, for example, they previously had to sell 100 units per month to cover all their expenses, but now they’re not getting that many anymore.
Volvo last year told TopAuto that demand for its electric XC40 was very high and the only reason it did not sell more than the 30-odd units it did was that parts shortages rendered it impossible to build more, with these shortages being the main determinant for how many models Volvo will sell this year, too.
This supply shortage trickles down to used-car dealers as older cars are being bought up faster and new cars are coming in at a slower rate.
Therefore, dealerships have to make ends meet with however many units they can get their hands on, which have apparently materialized in higher average prices on the used market.
With no end in sight to the issues at hand, it seems South African carbuyers are no longer haggling for discounts, but rather to pay the full price and nothing over.
Expensive used crossovers
We found the below advertisements of popular crossovers which are listed on AutoTrader for well above their retail price – which shows that no brand is excluded from the price-hiking frenzy.
These ads might be cherry-picked and do not reflect the state of the market in its entirety, but they are an interesting and unfortunate result of two years of near-continuous market shocks.
Chery Tiggo 4 Pro 1.5T Elite Auto
Ford EcoSport 1.5 Ambiente
Haval Jolion 1.5T Super Luxury
Hyundai Venue 1.0T Motion Auto
Kia Sonet 1.5 EX
Nissan Magnite 1.0T Turbo Acenta Auto
Renault Duster 1.5dCi Zen Auto
Suzuki Jimny 1.5 GLX AllGrip Auto
Toyota Urban Cruiser 1.5 Xs Auto
VW T-Cross 1.0TSI 85kW Comfortline R-Line
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