When considering buying a new car, South Africans may not consider their true budget or all of their options. Here are a few things to consider and ask yourself before making this commitment, according to Kerry Cassel, Managing Director of MotorHappy, an Imperial company providing information and motor management products for vehicle owners.
While on the verge of seeing some normality on our bank balance statements, following the festive season splurge, South Africans may be tempted to stretch their budget to its limit in order to cover the monthly instalments of their ‘dream car’.
However, along with the deposit and instalments, the depreciation of the Rand, increasing cost of living and the country’s uncertain ratings outlook has to be taken into consideration when considering making this commitment.
Cassel says, “We need to factor in that the cost of living may continue to increase meaning that we will be paying more for everything from food to petrol. With this in mind, a budget which makes a tight provision for car payments may be unrealistic in the near future.”
“While new cars are affordable for some, a large portion of South Africans may need to look to the used car market,” Cassel explains.
Economic pressures have resulted in an increased demand for used cars, the Transunion Vehicle Pricing Index (VPI) highlighted that, in the third quarter of 2015, the ratio of new to used vehicles financed widened to 1.83 on a year-on-year basis. That is one new vehicle to 83 used vehicles financed.
Cassel notes that the National Association of Automobile Manufacturers of South Africa’s Total Vehicle Sales also highlighted a decrease in vehicle sales to 48,615 in January from 49,250 in December of 2015.
“For some motorists, looking after their current car is their only option.”
