Fuel price increases at the pumps tonight will place more costs in South Africans’ mobility budgets, but it isn’t deterring them from buying new cars. According to data from naamsa | the Automotive Business Council, June’s new vehicle market grew for the ninth consecutive month to 47,294 vehicles, an increase of 18,7% compared to June 2024.
“South Africa’s new vehicle market growth has an uncanny alignment to the start of interest rate cuts,” says Lebo Gaoaketse, Head of Marketing and Communication at WesBank. “Interest rate reprieve since September 2024 has lifted some burden on indebted consumers and stimulated demand for credit and consequently new vehicles. The South African Reserve Bank has lowered rates 0,75% over the past nine months but may become more cautious with further cuts given global economic turmoil.”
But while lower rates have eased affordability marginally, motorists continue to face budget constraints. Despite low inflation, the average contract term continues to increase while the amount of credit reduces. “These are two major indicators of affordability pressure to reduce monthly instalments within the need for new replacement vehicles,” says Gaoaketse. “In short: South Africans want new cars – but they’re spending less on them.”
This has been enabled to some extent by the entrance of new brands to the market at aggressive price points, but also by innovative and attractive incentives on the dealer floor.
“While new vehicle sales continue to build momentum, the overall market growth is clouded in the greater context of having merely returned to pre-COVID-19 levels,” says Gaoaketse. “Compared to June 2023, the current market is only 1,5% ahead and 2024 volumes were 14% lower in the same month.”
Year-to-date sales for the first half of the year are 13,6% up to 278,911 vehicles. The additional 33,291 vehicles this represents in the market this year compared to the first half of 2024 is the realisation of the recovery the market has displayed this year.
South Africa’s passenger car market grew 21,7% to 32,570 units driven by business and consumer demand on the showroom floor. Dealer sales in the segment were up 26,8% to 27,240 deals while rental volumes actually declined 11,6%.
Light Commercial Vehicles increased 14,9% to 12,129 units also supported by a 23,3% rise in dealer sales.
“If the economic outlook remains favourable for further interest rate cuts, the new vehicle market should be expected to continue this momentum for the remainder of the year,” says Gaoaketse. “More reassuring is the level of stability in the market – even at these heightened levels – which provides much more certainty for the industry, dealers and consumers alike.”
