The time for used is now
With tough operating conditions and a relatively strained economy, more and more attention is being paid to used vehicles. And, as GAVIN MYERS notices, there are plenty of great deals to be had.
More often than not, a truck can easily have two or even three economical working lives – provided it has been well maintained, of course. Considering that up to a million kilometres can be driven during a vehicle’s time in some operations, means that buyers need to be extra careful when considering their purchase.
Danie de Beer, general manager of Hyundai South Africa Commercial Vehicles, says that businesses, currently operating in a tough economic environment, are looking to the pre-owned vehicle market for affordable, yet suitable, vehicle options.
“It gives the buyer the benefit of lower depreciation on the resale value, or price of the vehicle, and it still offers a solution to their immediate vehicle needs,” he notes.
The sale of used vehicles is definitely following a rising trend across the board. Ronald Melville, used vehicles sales manager at Scania South Africa, says that, compared to the same time last year, sales have increased by 30 percent in the first half of 2015.
However, it is interesting to note that the trade-in ratio (the number of trade-ins compared to new vehicle sales) is increasing; from 35 to 40 percent a few years ago, to 45 percent last year, and at the moment around 60 percent. “The higher the trade-in ratio the less fleets are growing. Transporters seem to be restructuring and upgrading their fleets, rather than growing them,” Melville notes.
Whatever the vehicle, buying from the used-vehicle operation of an original equipment manufacturer (OEM) will ensure a certain level of standards are adhered to, backed up by maintenance and warranty options – depending on the age and condition of the vehicle in question.
“Automotive manufacturers will need to make these deals as appealing as possible. In a competitive market, after-sales service and other customer experience initiatives are crucial, as this is what will drive brand choice and sustain repeat business,” says De Beer.
For example, Christian Coolsaet, MD of Volvo and Renault Trucks South Africa, explains that used vehicles need to be evaluated to meet different needs. “People coming into the market and opting for older trucks will have different expectations than those looking for younger trade-backs with hardly 600 000 km … The younger the truck, the easier it is to have a second life and secure financing and warranties.
“Prices are guided by market-related values and extensive vehicle evaluation. It is important to work with customers throughout the buying process to ensure the trucks and deals meet their expectations,” he said at the recent opening of the new Volvo Group Used Truck Centre in Boksburg, Gauteng.
An interesting trend, yet one that makes real sense, is that operators from the rest of the continent are increasingly buying used vehicles from South Africa. Currently, Volvo is noticing that 10 percent of its sales volume goes directly into Africa. According to the president of Volvo Group Southern Africa, Torbjorn Christensson, it’s now much more attractive to buy a used truck from South Africa than it was in the past from Europe or the United Kingdom (UK). “Africa needs to protect itself from incorrectly spec’d vehicles,” he says. “Happily, legislation in Europe is changing; they’re not allowed to sell used vehicles into Africa any more.”
Melville agrees: “Buyers in Africa seem to be leaning towards vehicles from here, because we run 6x4s, whereas in the UK they prefer 6x2s. The volumes we’ve been selling into Africa are because the 6×4 is better on dirt roads and in wet conditions. It’s a much better option and the clients are beginning to realise that.”
Recently, DAF filled an order for Dubai-based Edgebold JLT, for an operation it is running from Mozambique. Edgebold JLT’s John Raper explains: “After independently researching several leading truck brands worldwide, we realised we required vehicles with an African specification, which were suited to the southern African environment.
“On top of this, the brand had to be well supported in the region, not just by a company able to provide world-class technical support, but that also had knowledge of the region and a footprint in Mozambique.”
MD of DAF South Africa, Dave Black, says that DAF, too, is seeing many companies considering buying second-hand vehicles. “Unfortunately, such vehicles frequently don’t live up to their expectations in the long term and we strongly advise against buying directly from an unknown seller.
“Instead, OEMs offer value-added services, which include a thorough ‘health analysis’ of the vehicle, categorising problem areas into critical, recommended and optional repairs. The potential buyer can then make an informed decision based on the truck’s actual condition.”
De Beer probably sums it up best: “Over the years, the notion of the ‘dodgy’ used-vehicle salesman has been replaced by well-informed sales staff within showrooms, backed by the guarantee that the vehicles come with extensive warranties and service plans and a brand reputation that can be accounted for.
“Fleet sales teams that can specialise and cater to small and medium-size businesses, offer expert help and advice on choosing the fleet vehicles, and those that can perfectly match businesses needs, will succeed in the used-vehicle market.”