In a challenging economic climate, South African consumers are making savvy financial decisions when it comes to their vehicles. The trend is clear - more people are opting for used cars, and driving their existing ones for longer. South Africa’s pre-owned vehicle market has taken off, far outstripping new vehicle sales, amid a challenging economic environment.
Why a pre-owned car is a smart choice
Financial experts agree that opting for a pre-owned car over a brand-new one can be a game-changer for your finances. New cars lose value quickly - depreciating the most in the first few years. By choosing a used vehicle, you skip this initial value drop.
As Chris Pretorius, Chief Underwriting and Claims Officer at GENRIC Insurance Company Limited points out, “You can save on the purchase price and potentially afford a better model than if you were buying new, plus insurance costs are often lower. That said, buying a pre-owned vehicle isn't entirely risk-free. Doing your homework - like getting a comprehensive pre-purchase inspection and checking the vehicle’s history - is key to maximizing your savings. The cost-benefit ratio tilts even more in your favour if you ensure the car is well-maintained and properly insured,” says Chris.
Maintenance is key to longevity
Driving your car for longer periods can be a great financial strategy, but only if the vehicle is regularly serviced and well-maintained. Proper upkeep ensures that your car remains safe, reliable, and roadworthy. This is particularly important for older models that are out of warranty, where unexpected repairs can be costly and set you back thousands if uninsured.
"Regular maintenance isn't just about safety. It’s about managing your costs in the long run. Even if you're not buying new, you still want to avoid major mechanical failures that could set you back thousands of Rands. When it comes to insuring a used car, a thoughtful strategy is crucial,” adds Chris.
Top tips for ensuring your pre-owned vehicle:
Get Cover Major Mechanical Failures: For vehicles no longer under the manufacturer’s warranty, a Mechanical Warranty Insurance policy is a wise investment. This type of coverage steps in when a significant mechanical or electrical part breaks down—like the engine or turbocharger. GENRIC offers policies covering up to 220,000 km or 12 years, covering over 30 essential components, subject to the policy limits, terms and conditions. For a relatively low premium starting from around R180 per month, a major mechanical breakdown such as an engine, cambelt or turbocharger failure – which can easily top R30k or more in costs – will be taken care of and you won’t have to fork out the full repair cost from your own pocket.
Get a Service and Maintenance Plan: Rather than being caught off-guard by a hefty service bill for a major service, opt for a service and maintenance plan. These plans allow you to spread the cost over monthly payments, making car maintenance more manageable. Regular services improve fuel efficiency and minimise the risk of costly breakdowns. Depending on the option you choose and the make of your vehicle, your service plan will typically cover the general service components such as the air filter, engine and transmission oil, brake fluid, coolant, fuel and oil filters, pollen filter, spark plugs, sump wash and related labour, subject to the policy limits, terms and conditions. Under the maintenance component of your plan, you get the added protection for the replacement and repair of the wear and tear parts too.
Insure comprehensively for Theft and Accidents: Always insure your car for its ‘retail value’—what a dealer would sell it for—rather than ‘market value,’ which is typically lower. Keep your insurer updated on the vehicle's specifics, from additional features to safety devices, to avoid unpleasant surprises during a claim. This step is particularly important as the used car market fluctuates.
By making informed decisions—like buying pre-owned, investing in regular maintenance, and ensuring comprehensive insurance coverage—you set yourself up for significant savings. Not only do you avoid the steep depreciation of a new vehicle, but you also shield yourself from unexpected costs that could blow your budget.
“By adopting a comprehensive approach to insuring your ‘used’ vehicle, you protect yourself from the hard financial knocks should something go wrong – whether that is an accident or theft, a major component breakdown, or a major car service which comes at a significant upfront cost,” says Chris.
PERSONAL FINANCE