FORGET ABOUT THE BOOK

IF you're buying or selling a car, it’s time to get with the programme. We investigate getWorth’s innovative Al pricing model and how old-fashioned book values are a thing of the past

- Ray Leathern 

With South Africa's new-car market reeling from the knock-on effects of COVID-19, stock shortages, rising W interest rates, the cost of living, inflation, the energy crisis and sky-high new-car prices, the industry has had to adapt in an effort to remain sustainable.

According to the National Association of Automobile Manufacturers of South Africa (Naamsa), in 2019, South Africa's total domestic market for new cars, including vehicles sold and produced for export, amounted to 348 665 units. In 2021, post-pandemic, this figure was 239 267, a 31,37% drop. While unaudited figures from Naamsa suggest a 12% recovery to ± 268 000 units is on the cards for 2022, it still leaves a massive hole in SA's car market, nearly one-quarter of the industry pre-COVID-19.

To this end, consumers are turning to used cars like never before and sales volumes are approaching new heights.

According to TransUnion Africa's 2021 Vehicle Pricing Index (VPI), used vehicle purchases jumped by 7% in 2021, with a further double-digit increase expected in 2022. This amounts to ± 2,33 used vehicles sold for every new one during the same period. Where once consumers were buying new, many are now turning to high-quality one- or two-year-old vehicles with low mileage.

However, notwithstanding the complex economic factors at play, these pre-owned vehicles are just as challenging to deal with for dealers and sellers as they are for the consumer. Calculating a fair, market-related figure is an incredibly complicated task. The risk is greater still because, unlike box-fresh new cars, used vehicles depreciate more quickly and their value falls further every day they sit on the floor.