The second-hand car market is thriving in South Africa. Businesses specialising in used car sales are booming; look at WeBuyCars, which recently purchased the TicketPro Dome and converted it into a mega showroom for over 1400 used vehicles.
The company’s new goal is to trade over 15 000 vehicles every month until mid-2024. WeBuyCars is owned by Transaction Capital, which is looking to grow its market share beyond its current 10% threshold. Transaction Capital CEO, David Hurwitz, states that WeBuyCars accounts for 43% of the company’s overall profits and that annual dividends have increased by 35%.
This shows that the current used car market is booming in South Africa as consumers are feeling the crunch. More buyers are turning to used vehicles instead of new ones as it presents an affordable opportunity to purchase a quality vehicle from reputable brands.
While Formex Industries mainly manufactures automotive components for original equipment manufacturers (OEMs) and Tier 1 suppliers, we also produce high-quality aftermarket parts and spares for second-hand vehicles. These include catalytic converters, tubular exhaust parts, window frames and seatbelt anchors, to name a few.
Used car companies performing well
Currently, around 30% of used vehicles sold by WeBuyCars are online transactions. The company sells around 12 000 vehicles every month and buys another 12 000 – keeping its stock levels steady. The average turnaround time for a used car is about 25 days. However, WeBuyCars is one of many used vehicle businesses that is doing well.
AutoTrader has also confirmed that there is high demand and a short supply of used cars in South Africa. This has driven the prices of used vehicles up by about 8% since the pandemic. In fact, the pandemic heavily impacted new vehicle sales in South Africa, which opened the door for the used market.
The lockdowns also put increased pressure on public transport systems, so many South Africans turned to used cars. Over 5% of South Africa’s population that once relied on public transport are now vehicle owners. “What we are seeing is that more and more people are opting to be first-time owners of cars as opposed to passengers,” says Hurwitz.
What’s next for the industry?
The used car market is highly competitive, and numerous websites in South Africa specialise in second-hand vehicles. This makes it hard for consumers to choose the right platform. Innovation and thinking outside of the box have become key.
According to Hurwitz, WeBuyCars is already offering ‘cars as a service’ in Morocco. Essentially, this gives consumers the option to ‘subscribe’ to a used car for a monthly fee, rather than buying it or financing it. The benefits are that the user gets a fully-insured vehicle on a flexible contract without having to pay for the maintenance and other costs of ownership.
“WeBuyCars plans to offer all of this across the African continent in the future, with operations already opened in Morocco,” explains Hurwitz. While the Moroccan branch is brand new and still quite small, it has already sold subscriptions to 30 cars in the last month. This innovative approach to used cars could revolutionise the sector.
As the South African second-hand car market thrives, it benefits automotive component manufacturers too. Aftermarket parts, OEM components and spares are key offerings in the used car segment. Especially where maintenance and repairs are needed more frequently. For more information about our components and products, please contact us today.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex is a Level 2 B-BBEE supplier. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).
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