More People are Buying Used Cars Without Using Technological Channels

The new COVID-19 variant, OMICRON, is widely and quickly spreading in South Africa, posing serious challenges to the economy, according to WHO. The vehicle market is being hardly hit by the pandemic, experiencing shortages of supply for new cars. This shortage and the rise in new car market value has driven more and more South Africans to buying used cars. In turn, since there is a greater demand for second-hand cars, their prices have considerably rocketed, causing car insurance premiums to rise as well.

However there has been a 6.1% rise in new car sales in October, as reported by naamsa The Automotive Business Council, there’s still an upward trend of people buying used cars. The COVID-19 pandemic not only had an impact on citizen’s pockets, but also on car prices, making South Africans more careful with their money.

Why are both new and used car prices rising?

There is a worldwide shortage of microchips needed for assembling new cars, and of course it is also affecting South Africa. Due to this shortage of supply, new car prices are soaring since the production is not enough to cover the demand. As a consequence of this trend, people are turning to second-hand vehicles, and as the amount of people who are considering this option is also surpassing the availability of vehicles, prices rise.

According to https://www.quotesadvisor.com/, there is another issue that car buyers in South Africa need to consider when deciding to trade in their vehicles: the price of fuel goes up. The Department of Mineral Resources and Energy announced a 48% increase in the basic price of fuel. So, when it comes to buying a new car, consumers have to also take into consideration that driving it will also be more expensive than it was before.

Why are car insurance premiums also rising?

Since there has been a rapid shift in prices for second-hand vehicles, car insurance companies had to reflect that shift in their premiums. Otherwise, the car might be underinsured. So, when buying an online car insurance, consumers will notice that premiums are higher.

Mandla Arthur Mnguni, Senior Financial Planner at Old Mutual, recommends policyholders to check with their insurance companies to see if their current car insurance is not underinsured. If it is, in the event of a bumper bushing or any other kind of incident with their vehicles, they would have higher out-of-pocket expenses. Another useful tip shared by Mnguni is for consumers to always buy car insurance from reliable and renowned car insurance providers.

In some parts of South Africa, the Omicron COVID-19 cases have risen to a striking 400%, however the hospitalization rate has not followed suit since the new variant seem to cause milder symptoms. Unfortunately, the vaccination rate in South Africa continues to be quite slow. For this reason, the Ministry of South Africa urges the population to avoid listening to anti-vax conversations on social media and to receive their doses.

It remains to be seen how this new COVID-19 variant will develop and what the extent of the economic damage will be. Hopefully, the vaccination program might cushion the blow.

Last Updated: December 21, 2021