If you’re looking for a new car, it’s a buyers’ market, writes Charlene Smith
Buying a car is one of the most expensive investment decisions many of us make, but with car sales plummeting, now may be the time to bag a good deal.
John Cuming, Delta Motor Corporation’s director of sales and marketing, says economic conditions in the vehicle market place “are tough and extremely competitive. Although the price of new vehicles has reduced in real terms since 1995, affordability remains a problem and continues to be the key to increasing the size of the domestic new-vehicle market.”
Buying a second-hand car means you will not suffer the crippling depreciation most new cars suffer the moment the key is first turned. But on the other hand, with a new car you have the protection of manufacturer guarantees and initial free services.
By keeping to those services you will enhance the value of your vehicle and ensure it becomes a trusty steed.
If you are considering buying a car, plan ahead. Look at your budget and carefully evaluate what best suits your pocket and your lifestyle, and even the areas where you travel most often.
Buying a cabriolet with a soft roof may be desirable, unless you drive through crime-ridden areas where a sharp knife could help thieves break into the vehicle easily.
Spend as much time as you can looking around, and study motoring magazines for ideas and price comparisons.
Investigate how you will finance your vehicle. Will your company pay, or do you have to find a good finance house, perhaps affiliated to your bank, that has reasonable interest rates?
Don’t just use the finance scheme run by your bank or recommended by the car dealer, shop around.
The golden rule on insurance is not to cut corners. Finance houses will demand that you are insured before they extend a loan, and that you remain so for the duration of the loan.
Even if you buy a brand-new car you will at some stage require help with a battery that needs charging, a tyre that needs changing or one of the many idiosyncratic troubles that cars have, so ensure there is reliable after-sales service.
Nico Vermeulen, director of the National Automobile Manufacturers Association, says: “It’s a buyers’ market. Dealers are very competitive and, quite frankly, I can’t think of a better time to consider buying a new car. Prices have reduced in real terms between 10% to 15% over the past two years.
“The consumer has a far greater choice than ever before because of new entrants to the market place and can buy a high-tech product at highly competitive prices.
“Margins have come down substantially at the entry-car level, so there is not much scope for dealers to offer a discount. With vehicles priced at around R45 000 or less the margins are very tight.”
Craig von Essen, head of Product Communications at Delta Motor Corporation, agrees that it’s a buyers’ market: “The market is softening and manufacturers who made optimistic forecasts will have vehicles building up on the grass which they will need to offer incentives to sell faster.”
Among Delta products, he says, some models are very popular at present, namely the Corsa Lite (selling for R42 651) and the Isuzu KB double cab 4×2 (R138 904), which he says is selling faster than they can make them.
The Isuzu double cab can be used as a passenger vehicle during the week and “at the weekend you can throw in rubbish for dumping, or put camping equipment and kids in the back”.
He says buyers are not looking for a cheaper version of the Landrover Discovery, which is a luxury passenger vehicle, although Delta has just released the Isuzu Frontier (R191 000) as a competitor to the Nissan Sani, all of which fall into the category of the luxury jeep.
Von Essen says that affordability is the name of the game in South African car sales: “A person who can afford a Mercedes Benz will still buy one. It is the lower end of the market that is battling at present.” However, Vermeulen says fleet discounts and cash discounts can still be negotiated.
What the savvy consumer needs to do once they have determined the price they can pay, the car they are interested in, and how good after sales service is – as well as the cost of that service – is to look for a vehicle manufacturer or car dealership that is offering zero interest or very low interest rates.
And do it soon because with a new round of interest rate cuts and a firmer economy in the second half of the year expected car sales are set to improve and today’s deals will become a thing of the past.
Delta has introduced zero interest rates on their Astra and Kadett ranges. The top-selling vehicles in those ranges are the Astra 160 IE (R93 308) and the Kadett 180 IS (R97 963), both with air-conditioning and power-steering.
Buyers pay the full retail price with no discount – and anyone who has tried to negotiate a discount will tell you how meaningless these usually are – and a 20% deposit, and pay no interest for the life of the loan.
Vermeulen says the rule “buyer beware” applies to buying a new car. “It is incumbent on would-be first-time buyers to make sure that when they buy they ensure a reputable after-sales service – go for a dealership attached to an established company. Do a bit of research, read industry publications, test drive vehicles.”
Von Essen says buyers must ensure they get good service back-up: “If you drive around the country, will you be able to get the car serviced or repaired easily? Is the warranty for one year or three years? Is there an anti-corrosion warranty?”
An excellent service offered by some manufacturers is the so- called driver support programme, like Delta’s Assist Plus.
If you run out of petrol or lock keys in the car, someone will come out and help.
If you are involved in an accident or your car breaks down, you will be fetched and the car taken away later.