A tough act to follow

The recently revised Used Goods Act of 2012, (which replaces the Used Goods Act of 1955) – together with the Consumer Protection Act, which stipulates a number of constraints for the used vehicle dealer – makes trading tougher, especially for many of the smaller used truck and bus dealers

The Consumer Protection Act states that used trucks and buses that are sold by vehicle dealers can no longer be sold “voetstoets” or without a current Certificate of Fitness.

Many of the trucks and buses that commercial vehicle dealers buy for resale need to be repaired before they can be sent to a testing station to obtain a Certificate of Fitness.

In order to repair many of the more modern trucks and buses, which are fitted with hi-tech computerised components, sophisticated electronic workshop equipment is needed – which many of the smaller dealers do not have and cannot afford.

 In the past, much of the work that was needed to get the vehicle into a roadworthy condition was outsourced by the smaller used vehicle dealer to small one-man workshops. But most of these workshops also do not have (and cannot afford to buy) the expensive diagnostic testing equipment.

The result is that many of the smaller used commercial vehicle dealers are now reluctant to enter into this segment of the market.

The next problem, that many smaller used truck and bus dealers face, is the financing of vehicles that are older than five years.

In these tougher economic times banks are generally reluctant to approve credit to a used truck or bus buyer for any model that is more than five years old. If the dealer selects to trade in this market, he must provide his own finance to customers together with the risk involved. Therefore, the used truck and bus dealer is caught in situation where he is restricted to trade in vehicles that are less than five years old if he does not want to carry his own finance.

The Used Goods Act of 2012 also stipulates that the used vehicle has to be registered with the Commissioner of the South African Police. This means more hassles and red tape. Plus the act stipulates that on receipt of the used vehicle, the dealer cannot deliver or change the form or appearance of the vehicle for a period of seven days. This can result in a negative cash flow for the dealer, as the sales process becomes longer.

The new Used Goods Act of 2012 clearly states that it is the responsibility of the dealer, or person buying a vehicle, to ensure that he or she is not buying a stolen vehicle. Dealers would be well advised to note that, according to the Used Goods Act of 2012, any person who buys stolen goods (including vehicles) is considered as guilty as the person who stole them.  A dealer found guilty could end up with a 10-year prison sentence.

The final result of new legislation is that buyers of used vehicles now have more protection and many of the small unscrupulous fly-by-night dealers no longer exist.

One of this country’s most respected commercial vehicle industry authorities, VIC OLIVER has been in this industry for 49 years. Before joining the FOCUS team, he spent 15 years with Nissan Diesel, 11 years with Busaf and seven years with International.