The age old question whether to buy new or used cars pops up again. In the past week, BMW of America circulated a press release detailing proposed price increases in their 2013 and 2014 cars. This will affect almost all its ranges from their entry level 1 Series to the X5, etc. However, there has been no indication of such a move in South Africa, even though all the factors that would promote a price increase for new vehicles are at work.
We will not delve into what's going on in the United States, highlighting our own environment is much more important. Three things stand out that should prompt similar actions to the US. (1) The recent + month long strike in the automotive sector which as early as three weeks into it the chairman of the National Automotive Association of South Africa extrapolated that, “The aggregate production losses to date [11 September 2013], at vehicle manufacturing level, amounted to over 45 000 vehicles which translated into a production revenue loss of about R20 billion.” All things equal, BMW (and the other manufacturers) have to recoup that loss revenue loss either by laying off people or by increasing the prices of newer models. (2) Continuing with the strike, related workers in the petrol industry have also taken industrial action, which has affected motorists. This coupled with ever rising crude oil prices that in the past twelve months have risen from about $80 to $110 per barrel. In simple terms, our fuel prices will continue to go up even though we had a 20 cent and 2 cent reduction for petrol and diesel respectively in the past few days. The third and last indicator at increased prices for new [BMW] cars are inherent in the cars themselves. The cost of BMW's new technologies which they have rolled out in their new cars are passed on to buyers. The EffiecientDynamicsTM which is centred on fuel economy and reducing CO2 emissions, is standard with all BMW cars for sale today. Basically, you want more (out of your car), you pay more.
Of course, a lot of deliberation goes on before any such drastic moves, but while there is still some uncertainty, used BMWs seem to be an equally good idea for any car buyer in South Africa. First and foremost second hand cars are cheaper. It's that affordability that is the biggest draw-card for buyers. Specifically for BMW, which is on the high scale of the band, are Certification Programmes. The benefits of which are –
- Low-milaege used cars with no history of major damage like an accident are considered for resale.
- Used cars are also fully financed and warranted beyond their original factory warranty which can include the same options as new cars.
- The other reason opting for a used BMW instead is that the previous owner has already taken the bulk of the car's depreciation as soon as he or she drove off from the dealership with that car when it was new. Again, you as a used car buyer will get the benefit of price.
Whether or not the strikes, fuel increases and everything else factored into a move to raise the price of new cars actually comes to fruition, there's a great upside to buying a pre-owned model right now.
Author: Pierre Theron