BURCHMORES MEGASALE STARTING ON JUNE 4

“Football” may be the word topmost on the minds of soccer fans the world over. But the word on the lips of savvy car buyers in South Africa is bound to be “Burchmore’s” as the company starts a massive year-end financial clearance sale.

The enormous sale is taking place as the used car market is set to turn; supply constraints are easing and financing is becoming more accessible.

According to Darryl Jacobson, managing director of Burchmore’s, the sale will take place countrywide and the public will be privy to substantial discounts on used cars. “Our year-end financial clearance sale will kick off on Friday, June 4. We will have 1 200 vehicles on display – from cars for students and mom’s taxis through to 4x4s and bakkies,” he reports.

Members of the public will be able to purchase vehicles off the floor (in the same fashion as they would at a regular dealer) at wholesale prices. The units will not be auctioned.

The sale has been prompted by two factors: an excess of stock at financial year-end and the looming FIFA World Cup. “As is the case in all companies, it is not desirable to have an excess of stock at financial year-end. We have found ourselves slightly overstocked and, with financial year-end looming, we have to reduce our stock levels. As such, we are offering irresistible deals to prudent buyers,” Jacobson says.

And the football factor? “We are mindful of the fact that customers will be preoccupied with watching the soccer; they won’t necessarily be out shopping for cars, property or making other capital purchases. We need to improve our revenue before the start of the World Cup and then we obviously would like to maintain momentum during this sporting event. One way of achieving this is by offering motorists an outstanding value proposition,” Jacobson explains.

Brand Pretorius, chief executive officer of McCarthy Limited, says that – because used car prices have stabilised – this is a good time to get into the car market. “There is no doubt that the used car market has been softening. We don’t have a scientific explanation for this trend, but we have seen evidence over the last four to six weeks that demand for used cars is starting to slow,” he reveals.  Burchmore's is a division of McCarthy.

Pretorius says that one of the reasons could be the flurry of entry-level new car launches. “These very attractively priced entry-level cars are certainly taking business away from used cars. There is a swing from used to new in certain sectors but the changing market is not unexpected; the structure of the market was somewhat abnormal – demand for used vehicles was surprisingly high. Used cars somewhat dominated the market. The ratio is however now normalising,” he maintains.

The lack of access to finance has inhibited used car sales. “On the new car side of the equation, it is sometimes easier to get finance. Most of the original equipment manufacturers (OEMs) have financing companies, which almost act as an extension of the marketing companies,” notes Pretorius.

For this reason, Burchmore’s offers customers a range of in-house financing options. “In addition to insurance and warranties, Burchmore’s offers finance to customers who buy off the retail floor or on auction. Naturally, these services will be available at all three branches during the year-end financial clearance sale,” says Pretorius.

He adds that used car buyers often find it easier to secure finance at Burchmore’s because of the fact that the company sells at wholesale prices. “The banks can see the customers are getting a good deal and there is sufficient equity in the deal,” he explains.

Because of the value-for-money proposition afforded by Burchmore’s, many customers don’t require finance. “Cash transactions account for about 50% of all sales at Burchmore’s now,” reveals Pretorius. (It should be noted that, due to security considerations, the company never accepts cash on the premises.)

Andre Dalais, finance and operations director of Burchmore’s, adds that financing has also become easier as the banks have more of an appetite to finance deals. “The banks have definitely opened the taps a little bit so it’s considerably easier to get finance now than was the case six months ago,” he says.

Pretorius says consumers are also starting to pay off their debt. “Sales at our new and used car operations are certainly still being inhibited by lack of access to finance; we have the customers but some of them are battling to get credit. This is understandable. Household debt as a percentage of income is currently 79%; in 2006, it was 48%. But there is no doubt that, as consumers are starting to pay off their debt, they are becoming more credit worthy,” he maintains.

In the past, used car sales have also been constricted thanks to supply constraints. “Repossessions have decreased, and these represent a considerable source of supply for Burchmore’s. Having said that, we expect improved supply over the next couple of months – and the year-end financial clearance sale is evidence of this trend,” says Pretorius.

Given the improved availability and easier access to finance, Pretorius is predicting growth for the used car market in its totality this year. “We are reasonably positive that the used car market will show modest growth this year,” he predicts.

During the sale, the three branches – Sandton, Durban and Cape Town – will be open on weekdays from 8.30 am to 6 pm. On Saturdays, they will be open from 8.30 am to 3 pm, while the branches will open on Sundays from 10 am to 1 pm.

Given the improved availability of stock, an enormous range of vehicles will be on offer. Jacobson says that, whatever motorists are looking for, they will find it at one of the three branches. “We have a huge variety in terms of range… from cheap runabouts to low mileage executive cars. We encourage used car buyers to visit one of our three branches and browse; given the variety, they will almost certainly find their ideal car – at a wholesale price, of course,” he points out.

The sale will continue for the month of June, but Dalais stresses that buyers should visit the branches sooner rather than later. “Buyers who are serious in their quest for a bargain should go to one of the three branches over the first weekend of the sale. While we have a huge selection of vehicles on sale, it will obviously be a case of first come, first served. I anticipate huge demand; people are continuously looking for bargains. We have held two similar events in previous years and the sales have been attended by thousands of customers. South Africans are extremely price sensitive; if they smell a bargain, they will be there in a millisecond!” he concludes.

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