Vehicle repossessions in South Africa appear to have bottomed out, a sign that the worst of the recession might be over.
The downturn initially resulted in a 75% increase in the number of repossessed vehicles being processed by auction houses, but the volumes have levelled out in the past two to three months, with a 20% to 25% decrease, according to a number of auction houses this week.
Auction house bosses and second-hand car dealers told the Mail & Guardian that, six months ago, prices for repossessed vehicles were significantly lower, but the decrease in repossessed vehicle volumes had led to a steady increase in prices, making bargain vehicles a lot harder to come by.
They all cited the demand for repossessed vehicles as a factor in the increased prices and said many private buyers had moved from buying new vehicles to purchasing second-hand vehicles.
This is backed up by Statistics South Africa, which reports new-vehicle sales dropping by 36%, from R24,1-billion between June and August last year to R15,4-billion between April and June this year.
Meanwhile used-car sales have dropped from R13,9-billion to R13,1-billion for the same time period, a fall of just less than 6%.
Statistics SA’s data shows that used-vehicle sales even grew by 1% between October and December last year, a remarkable feat in a time of recession.
Belinda Bezuidenhout, the director of Auction Operation, said volumes of repossessed vehicles spiked at the end of 2008 and the beginning of 2009 and that banks have had warehouses full of repossessed cars since then.
Auctioneer Mark Bezuidenhout said the number of people visiting the auctions to purchase vehicles had more than doubled. “People are buying down; they are not buying new,” he said. The volumes had started to taper off in the past few months, he said, but the demand was still there.
Lood Bester from auction house SMD said the volumes had definitely started to decease in the past three months. He estimated that there were about 20% to 25% fewer repossessed vehicles on auction.
“The dealers are very short of stock at the moment,” said Mark Bezuidenhout. “Even the franchise dealers who were selling new cars have shifted their focus to selling used cars, which has fuelled the demand.”
Mark James, who has been dealing in second-hand cars for nine years, agreed that there was about 30% less stock available at the auctions. “There are fewer nice cars and everyone is chasing the ones that are on the market. It’s a lot harder to get a bargain now.”
But there were still plenty of bargain-hunters at Auction Operation this week, such as Thabo Johannes, who was looking for a low-priced vehicle for his wife, and Bertus Steyn, who was looking for a double-cab bakkie for less than R100Â 000 and was keen to “cut out the middleman”.