It's hard to find a car (new or used) at a good price right now. So why not stick with your current vehicle and buy an extended Motor Warranty to prolong its lifespan?
If you're in the market for a new car, you're probably wondering why it's hard to find stock of the one you're after. And if you're considering a used car, you're likely wondering why the price is so high – not far off that of a new model.
You may be looking to replace your current car because your manufacturer Motor Warranty is running out and you don't want to risk costly future mechanical problems. While you've probably had a great offer for your car because the second-hand market is booming right now, you may be struggling to decide whether to buy a new or used car for the same reason. It's important to understand the market and your options, so let's look at why it's currently so tricky to make an affordable car purchase and what you can do about it.
New car sales have been largely flat for the past couple of years, due in part to the tough economy and the low demand for passenger vehicles. There were also long stretches during lockdown when car dealerships couldn't open for sales, and when factories were closed.
A global shortage of semiconductors and metals like palladium (which is used to make catalytic convertors) has meant that fewer new cars can be manufactured... and that's pushed up demand – and prices – for used cars as well. Washing machines, smartphones and every other electronic device use semiconductors and there just aren't enough of them to meet global demand right now, leading many companies to slow or halt production altogether. Some 70% of cars in South Africa are imported, and the other 30% still require semiconductors anyway, so there's no real way to win.
China is seeing a rise in Covid-19 cases again and has imposed new lockdowns, which will only deepen the supply chain crisis, while the war in Ukraine is limiting the supply of resources as Russia just happens to be the world's largest palladium supplier. Sanctions designed to push Russia toward ending the conflict mean that various product exports will be slow to non-existent, which will have tremendous knock-on effects in many industries.
Those looking to trade in or sell vehicles in the second-hand market have found that dealers are willing to pay great prices for quality cars since there's a massive shortage of used vehicle stock in the country. What that means, though, is that used cars are also being sold for top dollar, in a great example of ye olde 'supply vs demand' scenario. TransUnion's Vehicle Price Index showed that used car prices climbed by 7% in Q4 2021, and current conditions seem to show that they'll only continue to rise.
These trends in new vs used cars, plus the shortages being experienced in the motor industry, mean that the smart call would be to hold onto your current car for a while longer. If your worry is that you'll face expensive repairs in the future because your manufacturer's Motor Warranty is running out, there's a solution that will help cover the cost of unexpected issues.
You could consider an extended or pre-owned Motor Warranty for peace of mind. A Motor Warranty will cover you in the event of a mechanical breakdown and tide you over until car prices return to reasonable levels.
A pre-owned Motor Warranty will cover your vehicle if its original manufacturer's warranty has expired. It will take care of the repair and/or replacement of components listed under the respective policy's specifications arising from a mechanical or electrical failure during the cover period of your policy. An Extended Warranty, meanwhile, will extend the elements of cover as originally covered by the manufacturer.
Whichever option choose, a Motor Warranty is a sensible way to keep you covered while you squeeze a few extra years and kilometres out of your current car.
This article is for informational purposes only and should not be construed as financial, legal or medical advice.