If you’ve been planning to buy a new car you might be wondering if now is a good time to do so. The world has been turned upside down by the coronavirus pandemic, making it difficult to judge what’s happening in automotive and other markets. At the middle of August, South Africa’s lockdown was lowered to level two, and now, two months later, life is slowly starting to feel normal again. But what does this mean for the vehicle market? We’ve got the low down on why now might be a great time to invest in a new set of wheels.
Image: Eagle Ford
Low interest rates benefit buyers
Soon after Covid-19 hit the country, the South African Reserve Bank slashed interest rates to help protect the economy. The prime interest rate is now at 7%, the lowest it’s been in 50 years. For the average person, that means borrowing more money and paying less interest on the amount owed. This could result in you being able to buy a better car for the same amount that you had originally set aside before interest rates were lowered. Alternatively, by sticking to your pre-lockdown budget, you can take advantage of significantly lower monthly instalments on your new car.
Financial services provider Wesbank, which specialises in medium- to long-term finance, confirmed that consumers were already benefiting from reduced interest rates. The organisation has seen an increase in consumers asking for fixed-rate deals to save money throughout their repayment contract. They called this “a good opportunity to access some of the most affordable debt South Africans will experience for some time”.
Image: Toyota SA
More used cars mean better prices
Reduced incomes under lockdown restrictions have prompted many people who were hoping to buy a new car to consider a second-hand car instead. The good news is that used car dealerships are eager to make up for the losses they suffered when they were forced to close their businesses.
A report by AutoTrader found that the country’s used car market is estimated to have lost more than R16 billion in sales in the first three months of lockdown. Because of this, car dealerships might be more inclined to meet customers halfway than they were before the lockdown. Don’t be afraid to negotiate your way to a bargain.
Buyers have an added advantage because the number of used cars on the market with low mileage has increased by 23%. Prices have dropped as a result of the increased availability of second-hand vehicles. This means you’ll be able to buy a car that’s fairly new for significantly less than what it would cost new, allowing you to make even more of lower interest rates.
Some dealerships have also added an online element to their business. This allows you the opportunity to browse vehicles in your own home at your convenience before venturing out to a showroom to see and test drive your short-listed options.
Buy a rental car
Car rental companies regularly sell cars from their fleets as they get older, while vehicles still have relatively low mileage – and often at prices below market value. The number of rental cars being sold has increased as restrictions on travel and tourism caused a decrease in business for vehicle rental companies. Rental cars can be bought directly from some rental companies, such as Avis, Hertz, and Thrifty. Certain used-car dealerships also stock rental cars.
Great payment options for new cars
The South African vehicle industry took a significant knock during the first few months of the national lockdown to prevent the spread of Covid-19. The National Association of Automobile Manufacturers of South Africa (NAAMSA) reported that in July new car sales dropped by nearly 36% compared to the same time last year. This translates to a whopping 108,991 fewer vehicles sold.
Understandably, car manufacturers and dealerships are concerned about the decreased sales. As a result, many of them are offering great deals on new cars, or very competitive financing plans. Some manufacturers are allowing customers to buy certain models without having to pay a deposit upfront. Others are offering payment holidays for the first few months.
Image: VW SA
New car promotions
Here are some of the new car specials we found:
Eagle Ford is offering a no-deposit and payment holiday until February 2021 on the Ford Fiesta 1.0 Trend A.
Halfway Toyota is running discounts on the Toyota Fortuner.
The popular Volkswagen Polo Vivo is also available for no deposit with a three-month
Nissan is offering payment holidays until January 2021 for new cars.
Mahindra is allowing customers to buy without paying a deposit and is offering various incentives, such as free insurance and cash-back offers on some models.
Image: Mahindra Centurion
Car prices will increase with the CO2 tax
Carbon Tax (CBY) is a new tax in response to climate change aimed at reducing greenhouse gas emissions. The new regulations on CO2 tax will come into effect in April 2021 – this means the higher the CO2 emissions of the car you buy, the higher its price tag will be. Another good reason to buy a car now.
Image: Nissan SA
Do your research
As with any big purchase, it’s essential to do your research before buying. Don’t be tempted to make a quick or emotional decision just because something seems like a great deal. Have a look at what type of car, be it hatchback or 4x4, will suit your lifestyle best, and find a reliable make and model to match. Compare car prices, look at the vehicles’ history – make sure it hasn’t been in any accidents and take it for a test drive. Make sure that the deal you’re getting is, in fact good!
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