The used car market is showing the first signs of recovery, having remained stagnant over the past year while runaway sales were being recorded in the new car market.

The used car market is showing the first signs of recovery, having remained stagnant over the past year while runaway sales were being recorded in the new car market.

Brand Pretorius, the chairman of McCarthy Motor Holdings, reported that the group recorded its best sales month ever in July, with combined sales of 7 921 units. McCarthy's used vehicle sales rose by close to 30 per cent last month.

"The upturn in used vehicle sales is most encouraging," Pretorius said. "A more healthy demand for used vehicles will undoubtedly influence new car trading and volumes positively in the months to come."

However, he remained cautious about the sustainability, and added that there had not been any improvements in the upper end of the used car market. Pretorius pointed out that the great demand for used vehicles in the R50 000 to R70 000 bracket had led to a lack of inventory.

Meanwhile, in the R100 000 to R200 000 bracket, demand appeared to be normalising, a trend Pretorius attributed to an improvement in the perceived value of used vehicles in the category. This was resulting in an "acceptable gap" between new and used vehicle prices.

He also added that it was too soon to note a change in the ratio of new versus used vehicle sales, since the market remained heavily biased towards new vehicles.

This was due mainly to the favourable interest rates, low new vehicle inflation, strong consumer and business confidence, and added-value deals on new vehicles, Pretorius said.

Ronnie Watson, the chief executive of WesBank, said there had been no real shift in the ratio of new vehicles to old vehicles sold.

"We're very close to parity at one new for every 1,3 used, compared to the heady days of four used to one new.

"What has been introduced into the equation is affordability in terms of new vehicles. There's also so much to choose from, with 930-odd derivatives today versus the 280 derivatives in the 1990s."

Meanwhile, more than 45 000 cars were sold last month, despite indications that sales in the new vehicle market have started to slow down.

Original article from Car