AutoTrader has recorded a spike in customers searching for Chinese vehicles, an indication of future trends when those new models make it to the second-hand market.
The company connects vehicle dealerships with buyers on its online platform. New vehicle brands from China are gaining strong momentum in the South African car industry, as they offer stylish designs and advanced technologies at affordable prices, compared to other well established brands.
CEO George Mienie said sales of Chinese vehicles have grown from 3% to 12%, but that has not yet translated into the second-hand market. “So, we’re still waiting to see what the impact of Chinese vehicles on the second-hand market will be,” he said.
The number of searches that we experienced for Chinese brands this year, has grown 52% year on year, whereas the rest is growing at 10% to 12%. That, for us, is a leading indicator of demand. It tells us that the moment these Chinese vehicles start coming into the second-hand market, the demand will swallow up the supply
“The number of searches we experienced for Chinese brands has grown 52% year on year, whereas the rest is growing at 10% to 12%. That, for us, is a leading indicator of demand. It tells us that the moment these Chinese vehicles start coming into the second-hand market, the demand will swallow up the supply.”
He said Chinese vehicles offer 80% of the value of a European or German car, at 60% of the price.
AutoTrader, launched in South Africa 33 years ago, has 130,000 vehicles listed on its website, from 2,200 dealerships. Mienie said the most popular vehicles on the platform are SUVs, double cab bakkies, as well as entry level cars, He said September, October and January recorded a surge in car searches.
The plan is to grow the number of dealerships and the number of cars on sale on its marketplace by 5% to 7% in the next three years. Mienie said they were also working with small dealerships owned by previously disadvantaged individuals to assist them in listing, marketing as well as how to price their vehicles. They also get special pricing for using the platform.
AutoTrader is using artificial intelligence (AI) to improve its services. including price comparison and to gain insights into customer trends. “We are analysing how AI can help the two sides of our market. We often produce tools and products for the car seller or the car dealer, to help ensure businesses out there provide an efficient service to the car buying consumer.”
AutoTrader uses machine learning algorithms to help dealers describe the vehicle, price them, and understand where market demand and supply is going. For consumers, AutoTrader has price ratings that use machine learning to tell the consumer how a vehicle is priced compared to the rest of the market and its demand. “We drive a principle called trust and transparency. As a car buyer, you want to know everything there is to know about a vehicle.
“For dealers, we also provide a dealer reputation management tool, which uses intelligence and machine learning to solicit or get ratings, and then reviews from the consumer base that interact with that dealer. We then use intelligence in the background to give the dealership insights into sentiment about their dealership, and then the consumer also gets to see dealership ratings and reviews on the front end.”
Mienie expects the upward trend for pre-owned vehicles to continue as the unemployment rate remains elevated, and consumers are still under financial pressure.
“At the moment, our GDP is growing at maybe 1%, so that’s not real economic growth. It’s tough at the moment and if the economy gets worse than it is currently, it is likely new car sales will come under pressure, and the Chinese vehicles will dominate even more than they’re dominating at the moment because of their price points and the value for money that they offer.”
AutoTrader is part of Naspers OLX Group, a global online classifieds service, which reported sales of $777m (R13.8bn) in the year to March, up 18%. Adjusted earnings before interest and taxes was $270m, representing an increase of 61%.
The strong performance was primarily driven by its core categories: vehicles, real estate, and jobs in its key high-growth markets, including South Africa. OLX platforms, operating nine brands in nine markets worldwide, hosted nearly 64-million active listings daily.
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