Transport Month: New vehicles: we need more spending power

Dealerfloor has posed a few questions to various role players in the automotive sphere on specific issues with the eye on Transport Month.

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We asked Hannes Oosthuizen, Head of Special projects at Cars.co.za and well-known consumer expert at Cars.co.za, about buying patterns on the motor retail side, prospects for the future as well as the Cars.co.za Consumer Awards.

1: The new car market still seems to struggle, when do you predict we might experience steady growth again?

I think consumers and fleet buyers need to feel that things are moving in the right direction, in terms of the interest rate, in terms of the country's GDP outlook, the exchange rate and electricity supply. There are a lot of negative factors at the moment – some might say the new car market has proven remarkably resilient given all the challenges. But ultimately people need more spending power.

2: What are the main driving forces hampering growth and what needs to happen on the short, medium and long term to stimulate growth in the new car sector.

Affordability is a key issue – new car prices have increased significantly in recent times. But if you add rising fuel costs and the general cost of living, it is easy to see why people are postponing their new car purchases, or rather buying used. Of course, new car price inflation will not get back under control as long as the country remains on the back foot in terms of economic growth. We need a clear plan, as a country, and as an industry, and we need follow-through.

3: How did buying patterns change, say in the last three years, and do you predict more changes in this pattern?

In terms of the new car market we have seen a significant shift to value brands (the likes of Suzuki, Haval and Chery). These brands have also been the most active in terms of new model introductions. I do not see the trend changing, but I do foresee more challenger brands from China arriving in the market. This will make it even more difficult for established brands like Honda, Nissan and Mazda to compete, because the challenger brands are no longer a "grudge purchase", they are genuinely good. The affordable crossover segment will continue to expand.

4: What is the value of your Consumer Awards? Do they function as a guideline for prospective buyers and in what segments did you receive the most responses from owners?

From the outset, the main purpose of the Consumer Awards has been to be a tool for new car buyers to make more informed decisions. Yes, we hand out trophies to the winning OEMs, but we invest heavily in making sure that consumers know which brands and which models are the best in their respective segments.

We have always set the ultimate goal of the Cars.co.za Consumer Awards as being to influence buying decisions. If you look at the impact the Awards have had on Suzuki, I think it's clear that we've achieved that, but more can be done. We need brands to take the awards and apply them to their marketing efforts for maximum effect. Only then will the maximum impact be achieved. Going forward, you will see us basing our new-car buying journey on Cars.co.za mainly on the Awards.

5: How quickly will EVs become an integral part of the new car buying experience or will it be a niche market for years to come?

It will remain a niche market, but it will grow slowly and persistently. The Chinese brands will soon make more affordable EVs available in the market. We've already tested the Ora (Cat), to be called the 03 in the South Africa, and as the cheapest EV on the market, it has a lot of appeal.

Stability in electricity supply will help a lot, even though in reality for most households an electric car would be a second vehicle, one that does low mileage around the city. People tend to think of the worst-case situation on the topic of EVs, and that's understandable, but if you have the ability to charge at home, EVs are actually becoming quite practical.

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