The used-car market has flourished in recent years, says digital vehicle marketplace AutoTrader.

“Comparing AutoTrader trading data between the first quarter and third quarter of this year to the same period last year indicates that the market has continued to thrive.”

The surging demand for used cars has, however, driven up unit prices.

The average list price of used cars for sale has increased by 10%, rising from R386 682 in 2021, to R427 290 in 2022.

Search and advert views on AutoTrader for the above period have also grown by 5.64%.

Searches are an indicator of popularity and advert views a sign of interest in a particular car, while enquiries point to the car that consumers are most likely to buy.

Supply has not kept pace with demand, notes AutoTrader.

While the seven cars that sellers receive the most enquiries on have remained unchanged, the stock levels of these mostly locally built cars have dropped.

Supply of the country’s best-selling used passenger car, the locally produced VW Polo Vivo, has halved, while the second-biggest drop in supply in used cars has been the BMW 3 series (33%) followed by the locally built Mercedes-Benz C-Class (17%), the VW Polo (16%) and the imported VW Golf (11%).

In contrast to the situation around cars, the supply of South African-built used bakkies has increased. The Toyota Hilux (the vehicle that receives the most enquiries) increased in supply by 18% and the Ford Ranger by 3%.

Despite the overall demand for, and short supply of, used cars, there are some worrying local and international signs that suggest that the used-car market bubble may be about to burst, notes AutoTrader CEO George Mienie.

Locally, rising interest rates and inflation, as well as spiking fuel prices, are likely to dent demand, as the car-buying public feels the pinch of increased living costs.

Worrying indicators emerging abroad are a drop in used-car price inflation and concerns about the car-loan debt market in the US, with South Africa always lagging international trends.

So, can South Africa expect demand for used cars to fall in 2023?

Mienie believes that the long-awaited resolutions to global supply-chain issues, as well as the microchip shortage for new cars, could cause increased demand for new vehicles – which will exert downward pressure on used-car prices as demand falls.

“The used-vehicle price inflation bubble is flexing and under the right economic demand and supply conditions, could burst in the next 12 months.

“As housing costs go up and interest rates increase, car demand may fall. I always say, if the US or EU sneezes, we get pneumonia.”