There has been a major shift in buying patterns in the used car market in South Africa. Whereas auctions have traditionally played a huge role, with many buyers bidding for their dream wheels, more and more motorists are now switching to buying off the retail floor.
Indicative of this trend, Burchmore's - a company which has long been synonymous with vehicle auctions - is now claimed to be, officially, the largest car retailer in SA.
Burchmore's Sandton branch is now retailing an average of 380 vehicles a month; the Durban branch sells 165 vehicles off the floor a month, while Cape Town's monthly average for 2010 stands at 105. According to Darryl Jacobson, managing director of Burchmore's, this means that the company is now the largest car retailer in South Africa - by far. This is a major change of focus for the company, which since being acquired by McCarthy Motor Holdings in 1988, has auctioned in excess of 600 000 vehicles.
"There is much more to us than auctions," Jacobson notes. "The retail side of our business is becoming more and more important each month."
Just like a regular used-car dealership
Jacobson points out that Burchmore's functions just like a regular used-car dealership. "The difference, of course, is that our outlets sell far more vehicles than other used car dealerships in South Africa. We offer significantly more choice - we have thousands of vehicles on our floors at our three megacentres in Sandton, Cape Town and Durban. And, of course, unlike other car dealerships, we also sell at wholesale prices."
Significantly, the company also claims to offer buyers much more peace of mind than they might enjoy at some used car outlets. "We are a subsidiary of McCarthy Limited, a division of Bidvest. This means that prospective buyers or sellers can transact with us with complete peace of mind. They know that we're a blue-chip company with impeccable ethics," Jacobson points out.
Of course, when Burchmore's was first established, its sole purpose was to auction cars. "That's something that we continue to do to this day, and we're the largest vehicle auctioneer in South Africa by far. We have branches in Sandton, Durban and Cape Town, where we hold regular auctions. We also have weekly auctions in Midrand. Plus, we're a member of the South African Institute of Auctioneers. So yes, we're very active within the auction arena. But, based on recent buying patterns, the retail (off-the-floor) side of the business is becoming a lot more prominent," comments Jacobson.
New trend 'not surprising'
Brand Pretorius, chief executive officer of McCarthy Limited, says that this trend is not surprising. "There is a logical reason for the change in sales mix - and that is the substantial reduction in the number of bank repossessions. Furthermore, we now have an ongoing pipeline in terms of the supply of quality used cars into Burchmore's: any vehicle within the McCarthy retail network that is 90 days or older is sent to the company. These are high-quality vehicles that are auctioned or sold at wholesale prices, in keeping with the Burchmore's model. The real objective is to convert the stock into cash as soon as possible; therefore we don't realise a normal margin on these units. Those vehicles are generally sold off the floor and not on auction," Pretorius comments.
Bank repossessions decline
As such, while bank repossessions may be "substantially down", Burchmore's has not faced a stock crisis. "We continue to offer a massive range of quality, well priced vehicles, often with low mileage. In addition to sourcing from dealers, we receive stock from companies and individuals as trade-ins - and so we can offer the man or woman in the street a huge choice," notes Pretorius.
Graham Damp, managing director of the McCarthy Motor Group, concurs. "Yes, bank repossessions have declined in recent months - this is a good indicator of the economic recovery - and we have thus had fewer vehicles to auction. But we are still offering customers a superb selection of vehicles in all price categories. We are of the opinion that the shopping experience at the company is the reason for the continued success of this business. Our customers enjoy the selection of vehicles on offer and the value for money proposition," he notes.
Just like any normal used car dealership, Burchmore's offers members of the public the opportunity to trade in their vehicles; finance and insurance are available on the spot, and warranties (applicable from day one) can also be purchased.
"We perform all the functions of a normal used car dealership, but offer a much better value for money proposition - because of the fact that we sell at wholesale prices. It's a pity that many members of the public don't realise that we offer this service; they're missing out!" concludes Jacobson.
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