When times are tough financially, luxuries tend to be the first thing to drop off the budget. However, in the context of a country like SA
When times are tough financially, luxuries tend to be the first thing to drop off the budget. However, in the context of a country like SA - where public transport options are limited and many rely on their cars daily - having a safe and affordable mode of transport is a necessity.
This is according to Jarrod Berman, Managing Director of motor financial services business and Imperial company, MotorHappy, who highlights that while a new car may not be on the cards for the average South African in 2016, looking after their old or second hand car is vital.
Referring to the National Association of Automobile Manufacturers of South Africa’s (NAAMSA) prediction that 2016 would be the year of used car sales in South Africa, Berman notes that not only was the industry body’s prediction realised, but the sector also saw a dramatic decrease in new passenger car sales.
“Sales in this regard dropped from 37 325 vehicles sold in September 2015 to 31 957 in September 2016. Figures from the financial year ending in June 2016 show that the total industry sales for new cars dropped by a dramatic 10.3% year-on-year. This is far above predicted levels suggesting serious economic strain on consumers who are no longer able to afford new cars,” Berman says.
With an increase in the “tightening-of-the-belt” mentality South Africans have been forced to adopt - aggravated by the plummeting rand, prime interest rates of 10.5%, and fuel price increases peaking as high as R13.07 per litre in July - Berman notes that many South Africans simply don’t see the value in buying a new car and opt to hold on to their cars for longer, extending their payment plans from five to seven years or more.
“As a result, our industry has to constantly look for innovative ways to service new as well as second-hand car owners, ensuring that their safety - related to maintenance - is taken care of while also offering options that fits their tightening budgets,” he explains.
Berman stresses that while second-hand cars are attractive due to their initial lower price-tag, they are generally out of warranty, rack up increased maintenance costs, are heavier on fuel and would have naturally seen a fair amount of wear-and-tear.
He says, “The need for funds or a plan of some sort to foot these bills is often overlooked due to the initial thrill of buying a car – albeit a second hand one.”
Service and Maintenance plan options vary from one Financial Service Provider to the next, and the majority of plans are subject to a specified number of years or kilometres – whichever comes first. By the time a car has reached two to five years or its second owner, initial Warranties, Service and Maintenance Plans will likely have expired. This, however, does not have to spell the end for looking after your car.
“With the change in times and economic circumstances have come solutions to fit the needs of motorists ranging from Extended Service Plans and Warranties, to deposit cover,” concludes Berman. “For the safety of everyone on the roads and keeping budgets in mind, it is essential for South African motorists to know their options and keep their trusted, new, used, second-hand or pre-loved cars in top running order.”
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