The demand for used vehicles in South Africa is currently outpacing new car sales by more than two-to-one, according to Sheraaz Patel, executive head at Motorvaps.
According to Patel, this trend is largely driven by consumers seeking cost-effective transportation in a challenging economic environment. However, with inflation slowing and interest rates likely to drop further in November, a shift back toward new vehicle purchases may be on the horizon.
In this evolving landscape, used car dealerships that focus on offering long-term maintenance and protection services are better positioned to sustain profitability, Patel says.
“Affordability has been a major factor driving the shift towards used cars. However, buyers want more than just a low price. They want assurance that their vehicles will remain reliable without the risk of unexpected repair costs," says Patel.
To capture consumer interest in a competitive market, dealerships must focus on providing value beyond the vehicle itself. Patel cites the NIQ Mid-Year Consumer Outlook: Guide to 2025, which shows that price-sensitive consumers are not solely chasing the lowest prices. Instead, they are looking for a balance between cost and value.
“In a competitive market for used vehicles, offering added value is essential. Providing enough value can influence a buyer’s decision, encouraging them to spend a little more for the sake of convenience".
Patel notes that customers increasingly seek ways to protect their investments and avoid unforeseen repair bills.
“Dealerships that offer services such as extended warranties and service plans can meet this demand by providing buyers with protection against mechanical breakdowns and wear-and-tear expenses,” Patel says.
“When dealerships take a holistic approach to the overall product experience and offer these kinds of solutions, they provide more than just a vehicle. They give customers peace of mind and a sense of security,” Patel adds. “This builds trust, strengthens customer loyalty, and sets dealerships apart in a competitive marketplace.”
Patel says for dealerships, value-added products and services serve dual purposes: enhancing the customer experience and supporting long-term customer engagement.
“In a challenging economic environment where consumers are holding onto their vehicles for longer, maintaining strong relationships with customers through continued service offerings can provide a competitive advantage,” Patel explains.
According to Patel, incorporating extended warranties, service plans, and other value-added services enables dealerships to maintain ongoing engagement with their customers.
“Dealerships that incorporate these services are better equipped to deepen loyalty and create additional revenue streams. As consumer preferences and economic conditions shift, the ability to provide long-term support for vehicle owners will be essential for sustaining profitability.”
Looking ahead, Patel says the used car market is likely to face challenges as economic conditions improve and interest rates drop, making new vehicles more accessible. However, Patel believes that dealerships that prioritise delivering additional value to their customers will remain resilient.
“Used car dealerships that focus on value-added services and prioritise delivering additional value to customers will be better positioned to meet future challenges,” Patel says.
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