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2nd hand car market

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« on: October 16, 2008, 07:30:43 AM »

What drives the prices of cars in the used category? It can't be supply and demand. Look at the dealers - you will see lots of cars at every dealer and there are a lot of them. As far as I know they base their price on a small book but who compile this book? In a market economy a over supply bring prices down but it is not happening here. A clear case of a conspiracy at work Smiley
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Hellbound Sentry

« Reply #1 on: October 16, 2008, 16:04:48 PM »

What drives the prices of cars in the used category?

The used car market is overpriced because of the fact that new motor vehicle prices in South Africa are so high.  Used vehicle prices are based on depreciation.

In first world countries, new motor vehicles are affordable and financing much cheaper than in third world countries like ours.  The second hand motor vehicle trade in countries like Switzerland is almost nonexistent.

The "conspiracy" is with the new motor vehicle market and government import duties of about 100%.  There were laws that about 70-80% of the vehicle must be produced locally.  I am not sure what the case is today, but it forced motor vehicle companies to set up factories here. 

We cannot compete with countries that have top class factories, and our labour is too high compared to countries like China and Japan, where the minimum wage is equivalent to a bowl of rice a day.  Most manufacturing functions are also automated and require less physical labour.  During an inspection of the Toyota factory a number of years ago, I noticed that the spot welding equipment were robotic suits worn by numerous factory workers.  In other countries, these are fully automated.  (Not sure if they have upgraded these.) 

The point is that we are being screwed. Angry  (Screwed = To practice extortion upon; to oppress by unreasonable or extortionate exactions.)

An American can buy a 2009 Ford Mustang for $20,000.  Over 5 years, his interest will be about $2,500.  We would pay about R400K for the same car and +/- R200K interest, depending on the deal you get.  The average salary in America is about USD 50K to 75K.  White collar workers average USD 240K+.

An artisan in the United states can earn about $5,000 - $10,000  per month and Pay $380 per month for his Mustang.  This relates to R45,000 to R90,000 per month salary with an installment of R3420 per month for the car.

Reality is that the same person in South Africa might earn between R8,000 and R20,000 and have to pay about R10,000 per month for the car, or settle for a smaller car with a balloon payment, which is an even bigger scam.

Never mind the insurance and fuel costs (also a scam).  I heard (not confirmed) that Sir Richard Branson offered to import fuel and estimated that he could market it at around R5 per litre, but he was apparently turned down.  Then there is our corrupt Road Accident Fund and fuel tax that accounts for about 30% of the fuel price.

NB. All figures are estimated.  Statistics can be found on

In short - they rip us off, because they can.
godlike, humble, know-it-all
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« Reply #2 on: October 16, 2008, 17:02:13 PM »

Another sign of the "conspiracy":

Remember a few years ago when the Rand tumbled to over 14 to the dollar?
During that time car prices skyrocketed, and the dealers here kept telling us "sorry, it's because of the exchange rate."  And yet, over the next year and a half, the Rand recovered to eventually go under 6/1.
I can't think of one single car manufacturer who dropped the price a cent.
On the other hand, bike prices did go down.  I personally bought a Harley in 2003 for 189,000.  When the 2004 models came out, the exact same model as my bike dropped to around 142,000 (that is by memory so I could be mistaken, but it was under 150,000).   That is a HUGE drop.
godlike, humble, know-it-all
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« Reply #3 on: October 16, 2008, 17:04:43 PM »

I also remember drops on some of the other bike brands as well.
I can't give the figures as I did on my own bike, but I remember Ducati prices similarly dropping.
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