We watched more than 400 repossessed cars being auctioned, and they’re already going cheap
- Repossessed cars are expected to flood the market in 2021, but they're already looking pretty cheap.
- We watched hundreds of cars auctioned at discounts of a third, relative to retail value.
- One eye-popping deal on a high-end Mercedes came in at 78% below the estimated market price.
- Buying a repo on auction is not without its dangers, though.
- For more stories go to www.BusinessInsider.co.za.
Repossessed cars are being sold at a discount of up to 78%, and experts forecast that discounts will be getting deeper, with great bargains to be had – as soon as banks stop offering Covid-19 relief and repos "flood" in.
Prices are already attractive. A Johannesburg car auction manager, speaking on condition of anonymity, said cars were selling for discounts of between 25% and 30% to their trade value at his company's auctions, which is what he would expect dealers to pay.
In 2021, that is likely to deepen as the full force of a contracting economy comes down on consumers, he said.
Auction houses and banks market recovered vehicles as cheap, with claims that they offer "super deals" from Absa and that "[a]ll vehicles [are] sold well below market guide value” according to Imperial Auto Auctions.
See also | Car repossessions are rising after lockdown. Here’s how to stop you car being repossessed.
To gauge the state of prices independently, Business Insider South Africa watched seven online auctions where 471 cars were on sale in total.
These auctions were held on the MyCars.co.za website, which sells Standard Bank recovered cars, and the WH Auctions website, which sells WesBank reclaimed cars.
On average, successful bids came in at a one-third discount to the retail value or asking price, for cars four years old and with more than 115,000 kilometres on the clock.
For 25 of the repossessed cars, the highest big was at a discount of at least 60% to the retail price.
The best bargain was a black Mercedes Benz SL 500 2013 model with 73,446 km on the clock that received a high bid of R376,000, which was 78% below the retail price of R1.675 million.
The second example of an amazing bargain was a grey Peugeot 208 1.0 VTI 2014 model with 167,171 km on the clock that had the highest bid of R27,000, which was a 74% discount to the retail price of R102,200.
A third example of an incredible deal was a grey Citroen C5 2.0 HDI 2009 model with 219,273 km on the clock that had the highest bid of R32,000, which was a 70% discount to the retail price of R105,500.
Only twelve cars achieved a price that exceeded the retail price, including a 2016 Toyota Hilux 2.4 GD-6 with 67,951km on the clock (33% over retail); a 2018 model silver Mercedes Benz A250 Sport with 32,348km on the clock (16% above retail); and a 2012 model silver Toyota Hilux 2.7 VVTI Raider with 115,545km on the clock (11% above retail).
An employee at a Gauteng auction house says that popular vehicle brands like Toyota, Volkswagen, BMW and Mercedes were still getting reasonable auction prices.
But the price of French car brands is under pressure, he says.
In the actions we watched, Toyota, Volkswagen, and Nissan vehicles made up just under half the total number of cars on offer. The Toyota's sold at an average discount of 25%, the Volkswagens at an average 31% discount, and the Nissans at a 33% discount.
There are risks in return for those discounts. Those include that the bank or auction house might not provide you with the recovered car’s history, including its service record, and you will only get to view the reclaimed car just before the auction – but you cannot test-drive the vehicle.
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