New Car Models are in Shortage

May 22, 2021

There is a shortage of new car models in South Africa due to a global delay in the production of computer chips. Production has been paused by major vehicle manufacturers as they are waiting for these parts and there are cases where it may take up to four months.

pre-owned car

According to Bloomberg, US automakers were expecting a shortfall last month of 1.3 million in car and light-duty truck production because of the chip shortage, so we can probably expect the same here.

There has also been an increased consumer demand in South Africa, which could also be responsible for the shortage. According to the head of marketing and communication at WesBank Vehicle and Asset Finance, Lebogang Gaoaketse, there has been a demand increase for new cars in recent months. Naamsa and the Automotive Business Council agree with this as they report that sales year on year has increased by 31.8%.

This growth is due to the economy slowly stabilising, which results in consumer confidence coupled with the low-interest rates. The pre-owned vehicle market is also going strong.

Even though there is a current shortage, there are still plenty of cars for sale. You can find thousands of new cars for sale as well as an abundance of used cars.

Top Tips When Buying a New Car

It’s All in the Research 

If you have you’re an eye on a particular car then check reviews for the make and model. Look at reviews from South Africa, but also from the rest of the world. Ask what your family and friends think of the car. You can also ask certified mechanics that aren’t associated with the dealership for their opinion.

You should always test drive the vehicle and test drive more than one car on quiet roads and on the highway.  

Take your time to do your research as it is a big investment.

Should You Go For the Extras 

You should know what your budget is before you go to the dealer and don’t be tempted by all those extras like sunroofs, SatNav and so on. A car costs more than just the monthly instalments, so you need to factor in every cost.

What is the Depreciation Rate?

Ideally, you will want to choose a car that has a lower rate of depreciation. You can find online calculators where you can check the depreciation rate, which can be very helpful if you are deciding between two similar cars.

Don’t Skim Over the Financing Terms

It does make sense to pay more in the long-term by negotiating the price down, but if you are using financing to buy your car then shop around for the best loan deal.

You can opt for a finance agreement where at the end of the term, the car is paid off or you can lower the monthly instalment by going for a balloon payment. With a balloon payment, you will need to pay the outstanding amount at the end of the finance term. Your options to pay this off would be to save up enough through the term, sell the car to pay it or you can refinance the amount.

However, a new car depreciates in value and if you are on a budget then you should consider a pre-owned car. Someone else would have already absorbed the depreciation and there are some great used car deals out there.

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