Pre-owned cars are seeing a drop in local prices

Pre-owned cars tend to drop in price as time marches on. Partly because they add mileage, but also because they are simply getting older.

This long-term trend was thrown for a loop by the Covid pandemic. Massive disruptions to factories, transport hubs and supply chains (including a global shortage of microchips) caused the supply of new cars to be severely cut back.

People who might normally have bought a new car couldn’t get what they were looking for and had to go hunting used cars instead. But there are only a certain number of used cars in the market at any time. The increase in demand pushed used car prices up for the first time in at least a decade.

getWorth and the lower pre-owned car market

That continued for about two years, but car pricing experts, getWorth, say that new car supply has been recovering. At the same time, consumer confidence is taking a knock in the face of increasing interest rates, high fuel prices and the like. This has caused the used car market to turn – prices are falling again.

getWorth’s sophisticated pricing tools are based on AI and live market data. The algorithms are able to separate the effects of mileage and time to expose the real underlying price trends. “We are able to compare apples with apples,” explains getWorth CFO Colin Morgan. “For example, the algorithm would be comparing the price of a 2018 BMW 320D Auto with 50,000km a year ago with the same car at 50,000km today – not one that has added an extra 15,000km.”

GetWorth has produced a graph showing the like-for-like price trends for different price bands. One can clearly see how the normal falling prices reversed after the first Covid lockdown, and how the prices are turning again recently.

“Price levels remain high compared to two years ago,” says Morgan, “so car sellers can still get a decent deal – just not what they would have received at the peak. But it is good news for used car buyers. Buying a pre-owned car remains a sound financial decision as the vehicles are much more affordable than the equivalent new cars. High interest rates make that a big factor.”

Leading the charge

GetWorth’s information comes from its position as a leading online buyer and seller of pre-owned cars. The business developed AI-based pricing algorithms to enable more accurate live-market pricing. They are designed to help consumers buy right and sell smart.

“We were the first in South Africa to apply live market pricing and we have been refining the AI models since 2016,” says Morgan. “The fact that we use it to trade every day in the live market makes it real, rather than a theoretical exercise. We have over 350 cars on our floor; we monitor pricing daily to make sure they are attractively priced.”

GetWorth’s takeaway: with the market turning, sellers are no longer in the driver’s seat, but for car buyers there are good deals available.

For more information visit the showroom or contact getWorth on (021) 126-0300.

Posted by getWorth on Motorpress

For more local car sales news, click on our link here.