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By Natasha Joseph

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The soaring inflation rate and high petrol costs may have put the brakes on the market for new cars, but the prices of used cars have been “driven down quite significantly”, says the Retail Motor Industry (RMI).

People looking to purchase used cars are entering “a buyers’ market”, says RMI CEO Jeff Osborne.

“There’s a huge value in used cars; there’s never been a better time to buy,” said Osborne. “There’s a surplus (of used cars) that dealers need to sell.”

He said there was a great deal of “consumer choice” when it came to the variety of cars available on the second-hand market, and that prospective used car buyers were in a good position to negotiate with dealers for lower prices.

Pierre Carstens, manager of Auto-Pedigree in Bellville, said that because the dealership specialised in one- or two-year-old cars, it was “doing fine”.

“Our prices are lower than new cars, and people are going for something close to new,” Carstens said.

Heinie Brink, a salesperson with Burchmore’s Car Auctions in Milnerton, said the company had seen “an increase in vehicles coming through for auctions”.

“There are more people on the floor (at auctions) looking for bargains, using the repossession market,” Brink said.

Osborne said that although banks had been repossessing up to 6 000 cars a month over the past nine months, this number seemed to be “stabilising” as more people entered into restructured payment plans with their banks before being threatened with repossession.

Absa’s managing executive of vehicle and asset finance, Marcel de Klerk, said the company had repossessed 1 360 vehicles in August, and had repossessed, on average, between 1 300 and 1 400 vehicles each month this year.

A number of these vehicles were “high ticket cars”, indicating that their owners fell into a high income bracket. This indicated that not only South Africa’s “middle market” was hard hit by the rising cost of living, he said.

However, De Klerk said, there had been “a definite stabilisation” in the number of people falling into arrears with their car payments since April, and this trend had been consistent up to August.

“I firmly believe (repossessions) will start to decline by the end of the year,” he said.

He said Absa was restructuring clients’ accounts and only granting vehicle finance to people “if they can afford it”.

“The last thing we want to do is repossess. The bank and the client lose money. The motor industry will remain under pressure. I don’t see an increase in sales until 2010.”

Osborne said that even the new car market appeared to be stabilising. It was 20 percent down from the same period last year, but this seemed to be “levelling off”, he said.

“We sincerely hope it won’t drop more, and we’re not expecting a recovery (of sales) inside of a year.”

natasha.joseph@inl.co.za

Source: http://www.iol.co.za

This article was originally published
on page 6 of Cape Times on September 02, 2008

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