Lockdown forces SA motorists to go from ballin’ to budget rides
With their incomes being slashed, car lovers are doing smart trade-ins and going for cheaper models
South Africans are feeling the financial squeeze of about 50 days of lockdown and car dealerships are bracing for a flood of trade-ins as citizens look to stretch their rands further.
With the economy roiled by the global Covid-19 pandemic – along with a full deck of ratings downgrades as a result – the Treasury has estimated that as many as seven million jobs may be lost.
With many facing the grim prospect of salary cuts or unemployment, motorists are looking to scale down what they spend on their cars, according to a survey conducted by car sales site AutoTrader.
The survey, run during the first week of May, was aimed at plotting buying patterns ahead of the reopening of car dealerships.
Searches for secondhand vehicles under R50,000 have increased by almost 300% versus normal pre-lockdown levels.George Mienie, AutoTrader CEO
It found that the financial well-being of 65% of vehicle-buying consumers in SA has been negatively impacted by the nationwide lockdown, with 30% of respondents indicating they were under pressure to replace vehicles with cheaper options within the next month.
Johannesburg advertising executive Poobie Pillay told Times Select his salary had been cut, forcing him to sell one of the two cars his family owns.
“Currently I have a car and so does my wife, but with everything that has happened with the lockdown and the likelihood that it may continue until the end of the year, we really don’t need more than one,” he said.
“I am not going to be getting the commission I normally would have, and we had a baby six weeks ago, so I am trying to think ahead and see where we can cut our spending and save as much as we can,” Pillay added.
AutoTrader CEO George Mienie said Pillay’s case was not unique and their survey revealed that as consumers lost their jobs or received salary cuts, they demonstrated an urgent need to free cash or reduce monthly household costs.
“Searches for secondhand vehicles under R50,000 have increased by almost 300% versus normal pre-lockdown levels,” he revealed.
“Clearly, South Africans are worried about how they will feed their families,” he said.
Moreover, even the well-heeled were looking to contain costs.
Anecdotal feedback from dealers trading on AutoTrader reveals that motorists are trading down from a BMW X5 50D (R730,000) to a BMW 520d (R500,000).
They are trading down from a Mercedes-Benz ML63 (R670,000) to a Mercedes-Benz C180 (R300,000), and from a Ford Ranger (R335,000) to a Nissan NP200 (R160,000).
The department of trade, industry and competition (DTIC) on Tuesday announced the much-awaited directions regarding the sale of cars and emergency automobile repairs during alert level 4.
Initially, automotive dealers could only carry out emergency vehicle repairs under level 4, with vehicle sales only allowed again under level 3 and routine servicing under level 2.
But pressure and lobbying from the motor industry saw this decision amended by DTIC minister Ebrahim Patel.
BMW Bryanston’s Nicole Cravinno said they already had clients making inquiries about cheaper models.
“We are finding that people are wanting to pick up cheaper cars by trading in the ones that they have,” she said.
“We expect to see a lot of this happening in the weeks to come. For many, their financial positions have changed completely, and they want to cut costs,” she added.
For some, she said, cars were a luxury item.
“Ten to one we will see people trying to cut back on their costs with trade-ins.”
For Pillay, the prospect of taking on more debt to support his household had pushed the decision to let one his cars go.
One of the cars – a Jeep Renegade – was an anniversary gift for his wife, meaning his Jetta 6 may be the one they try to get rid of first.
Modelling by the private-sector umbrella group formed to fight Covid-19 shows that if level 4 continued for a month, with a gradual move to lower levels, the economy will contract 14.5% in 2020.