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The car industry is booming in South Africa. In fact, according to Research and Markets, South Africa has the largest vehicle marketing by sales and exports in Africa. However, while sales of new and used cars have recovered to pre-pandemic levels in 2021, workshop revenue is still not quite what it was in 2019.
Thankfully, things are looking up. A substantial 18,7% of the value added within the domestic manufacturing sector was derived from the manufacture of vehicles and automotive components, thereby maintaining the industry's position as a key player in South Africa's industrialisation landscape. And what about used cars? Well, year on year the numbers keep climbing.
What is covered in this article?
CURRENT DEMAND LANDSCAPE OF NEW AND USED CARS IN SOUTH AFRICA
South Africa's new vehicle market bravely continues to grow year on year. According to the most recent report from Naamsa, the National Association of Automobile Manufacturers of South Africa, April's new vehicle sales increased to over 37 000 units ̶ a growth of 4,3 per cent compared to April last year.
Naamsa’s 2021 report shows even more encouraging year-on-year sales figures as the new car market recovers. The number of vehicles sold by manufacturers in South Africa increased by 22,1% from 2020 to 464 122 in 2021. In fact, the first half of 2022 saw encouraging increases as the industry continues to recover. However, the impact of the KwaZulu-Natal floods, as well as the Russia-Ukraine conflict’s impact on European exports, has left its mark on the first half of 2022’s figures.
“In 2021, more than 637 million total searches were conducted on AutoTrader, a record high, representing a growth of 28% year on year,” says AutoTrader CEO George Mienie in their report. “This translates into over 20 consumer searches per second.”
BUYING A NEW CAR: EVERYTHING YOU NEED TO KNOW
How to get the best deal. For most of us, buying a new car is the second-biggest purchase (after buying a home) we'll ever make, so it's something we want to do well. Here are five things to do to ensure your new car is the best fit for you:
What are balloon payments?
A balloon payment is a bulk payment that you make at the end of your car loan. While it keeps monthly repayment costs more affordable and attractive, a balloon payment commitment can become a challenge in the event of an accident.
If your car has been written off, stolen or hi-jacked, and it is insured only for market value, you will end up owing the bank a lot of money, which you probably don’t have. So, you’re paying for a car that you’re not driving.
Thankfully, there is insurance that helps with that risk. In fact, not only can it cover the risk of balloon payment obligations in the event of theft or an accident, but you can also even get top-up credit or credit shortfall insurance for when you’re in a financial crisis. So, you can enjoy your new car without financial stress or ballooning anxiety.
TRADING IN YOUR CAR: EVERYTHING YOU NEED TO KNOW
How to get the best deal
Want to trade in your old car? These trusted tips will ensure you get the most for your trade-in:
The hidden costs of trading in your car
While trading in your car gives you a financial step up to buy a newer car, there are hidden costs that car salespeople often fail to tell you about.
What is the difference between the retail and market value of a car?
Retail value. A car's retail value (which is typically the higher of the two values) is the average price a car dealer would charge to sell it. Simply put, it is the average price that a dealer would sell a car for – new or old - considering its age, condition, and mileage. What this means from a car insurance point of view is that if your car is written off in an accident or stolen, your insurance company will pay out the car’s retail value. This will make it easy for you to replace it with a similar make and model.
Reasonable market value. It is essential for short-term insurers to standardise how it equates the “reasonable market value” of vehicles since this can vary from vehicle to vehicle. For example, Santam’s comprehensive car insurance pays you the reasonable market value of your car. This means Santam uses the retail value of the car as its base, but then also factors in odometer readings, the condition of the car, as well as any extra items and accessories added to the car to give a more reasonable value. This makes it easier for you to replace your car if it is damaged or stolen.
Whether you want to make your car work better for longer, want to use it as a trade-in for your next car, or simply want to save on insurance, these practical tips will help you keep your car in ship shape, even if you’re working from home:
EVERYTHING YOU NEED TO KNOW ABOUT CAR INSURANCE FOR NEW AND USED CARS IN SOUTH AFRICA
Your car is one of your most expensive, most utilised possessions. It follows that you need to protect it. Moreover, most vehicle financing institutions insist on comprehensive car insurance to protect their risk. Below is a comparison of car insurance options, plus everything you need to know about car insurance to make the best decision for you and your car.
There are many options when it comes to car insurance.
These are the most common types of car insurance. Some insurance companies might offer more specialised vehicle insurance. Santam has these additional car insurance options:
Is comprehensive car insurance a better choice?
When it comes to getting complete peace of mind, comprehensive car insurance is the highest level of protection you can get for your vehicle. This is because it is the most extensive form of insurance cover that covers all bases and protects against unforeseen events. It is also the cover that financial institutions insist on to protect their asset. No matter what happens, you will know your investment is well looked after on and off the road.
In spite of this, many people are anxious that their insurance claim will not be sufficient to cover the cost of a replacement car.
For this reason, Santam offers comprehensive car insurance that includes a guaranteed value option to help car owners avoid any uncertainty regarding what the payout will be in the event of damage or loss to their vehicles.
This new concept in auto insurance guarantees the sum insured on your policy schedule. You will therefore know exactly for what you will be reimbursed. “It is worth noting that the sum insured set as the guaranteed value may still not be adequate or sufficient to cover the cost of the claim, or to replace a vehicle,” says Ewald Kemp, Underwriting Systems and Development Personal Lines Manager at Santam. “The onus always rests on the owner to ensure the amount he/she insured the vehicle for is correct.
While most insurance companies offer some kind of comprehensive cover, Santam’s comprehensive car insurance includes these significant benefits:
Plus, as an insurance policyholder with Santam, you also qualify for these additional benefits:
The quest for affordable car insurance
Now that you know more about what vehicle cover options are available, you need to know how much you’re going to pay. Did you know that insurance companies look at several criteria before determining what your premium will be?
We all want a good deal, even from our insurance broker! Here are some things you can ask your short-term insurance company in South Africa in order to adjust your premium to suit your pocket:
When choosing an insurer, choose one that offers a policy tailored to suit your needs and your budget. The right insurer is not necessarily the one with the lowest premium, but the one that ensures you have adequate coverage at the lowest price. Also, remember that affordable does not equal cheap. Sometimes “cheap” ends up costing you more in the long run.
How to switch car insurance
You might have opted to be insured with the bank that is financing your vehicle. You might feel locked in or obliged to stay with the insurance solution for fear that you will lose your financing if you switch. However, that is not the case.
Switching your car insurance can be done at any time. Here’s how:
Review what you do have.
Get an online car insurance quote
South Africans love to drive, and we love our cars. We drive to get to work every day, or to tackle the school run and daily errands. We drive to get away from it all and go on holiday. Our cars might be our livelihood, transporting others to and from work. No matter why we have them, cars are very much part of what makes us who we are.
So, whether you are buying a car fresh from the showroom, trading in your old car, or purchasing a used car, you can truly enjoy the countless hours spent on the road when you have the reassurance of a trusted insurance company behind you all the way. Safe travels!
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