Record vehicle sales growth hides affordability crunch for South African consumers

South Africa’s new vehicle market is enjoying a remarkable recovery, but behind the impressive sales figures lies a more complicated picture of financially stretched consumers turning to affordable vehicles, longer repayment periods and fuel-efficient technologies.

The latest figures released by automotive industry body Naamsa show that 61 890 new vehicles were sold last month, representing a 10.4% increase compared with the 56 051 units sold during the corresponding month last year. Passenger vehicles led the growth, with sales increasing 13.6% to 45 084 units, while light commercial vehicle sales rose 2.2% to 13 689 units.

Toyota South Africa Motors maintained its dominance of the domestic market, recording 14 495 sales last month and commanding a 23.4% market share. Suzuki Auto South Africa retained second position, setting a new monthly sales record of 7 292 vehicles, surpassing its previous high of 6 890 units recorded in October last year. Volkswagen maintained third position with 6 515 vehicles sold, while Ford overtook Hyundai, pushing it into fifth place. Hyundai recorded 3 207 sales, including its highest monthly dealer sales since 2022.

However, information from the banks suggests that growing demand does not necessarily mean South Africans are finding it easier to afford new cars.

WesBank reported a 22.3% year-on-year increase in new vehicle finance applications last month, outpacing the industry’s sales growth. Similarly, Absa confirmed stronger demand for new vehicle financing, while Standard Bank reported comparable growth in applications, although used vehicle

finance demand remained relatively flat. Yet all three indicated that affordability remained a significant obstacle.

Henry Botha, the head of strategy and business analytics at Absa Vehicle Finance, said increased applications had resulted in more approved agreements without any meaningful improvement in approval rates. “This indicates that while consumers remain keen to enter the vehicle market, affordability and credit qualification remain important considerations.”

WesBank spokesperson Lebogang Gaoaketse cautioned that stronger demand should not be mistaken for an improvement in consumers’ ability to qualify for finance. “Household indebtedness, elevated interest rates and rising living and motoring costs continue to affect affordability assessments,” Gaoaketse said.

The data suggests that the market’s recovery is being driven more by purchasing interest and expanding vehicle choices than by a substantial improvement in household finances.

A significant development is the growing influence of Chinese manufacturers, whose competitive pricing and extensive equipment levels are challenging established automotive brands. Another emerging trend is the reliance on extended financing periods.

Gaoaketse said WesBank’s data showed that customers were extending their repayment periods to manage monthly instalments, rather than relying on balloon payments. Average new vehicle repayment terms increased from 72.81 months to 74.17 months, while used vehicle agreements extended from 75.77 to 76.79 months. The proportion of agreements containing balloon payments declined from 35.51% to 26.70%.

Standard Bank also reported growing demand for longer repayment periods, although balloon payment usage remained relatively stable. While longer agreements reduce monthly instalments, they can increase total interest costs and leave motorists indebted for longer.

WesBank also recorded an increase in fixed-rate agreements, from 20.06% to 22.79%, suggesting greater demand for repayment certainty.

The developments come against a challenging economic backdrop. Last month saw inland 95-octane petrol reach R30.25 a litre, placing additional pressure on household budgets. Although government’s temporary fuel levy relief took effect this month, elevated transport costs remain a concern.

Rising fuel prices are also accelerating interest in alternative powertrains. Naamsa reported that 22 389 new energy vehicles were sold during the first nine months of this year, exceeding the entire total of 16 703 units last year.

WesBank recorded a 113% increase in hybrid finance applications, while Standard Bank reported that hybrid applications doubled and electric vehicle applications quadrupled during the third quarter compared with the same period last year. Standard Bank’s Derick de Vries attributed the growing interest partly to fuel price volatility and the availability of more affordable electric vehicles.

However, the growth rates must be considered against relatively small starting volumes, particularly for fully electric vehicles. Charging infrastructure, purchase prices and financing affordability remain important barriers to broader adoption.

South Africa’s new vehicle market is enjoying a remarkable recovery, but behind the impressive sales figures lies a more complicated picture of financially stretched consumers turning to affordable vehicles, longer repayment periods and fuel-efficient technologies.

The latest figures released by automotive industry body Naamsa show that 61 890 new vehicles were sold last month, representing a 10.4% increase compared with the 56 051 units sold during the corresponding month last year. Passenger vehicles led the growth, with sales increasing 13.6% to 45 084 units, while light commercial vehicle sales rose 2.2% to 13 689 units.

Toyota South Africa Motors maintained its dominance of the domestic market, recording 14 495 sales last month and commanding a 23.4% market share. Suzuki Auto South Africa retained second position, setting a new monthly sales record of 7 292 vehicles, surpassing its previous high of 6 890 units recorded in October last year. Volkswagen maintained third position with 6 515 vehicles sold, while Ford overtook Hyundai, pushing it into fifth place. Hyundai recorded 3 207 sales, including its highest monthly dealer sales since 2022.

However, information from the banks suggests that growing demand does not necessarily mean South Africans are finding it easier to afford new cars.

WesBank reported a 22.3% year-on-year increase in new vehicle finance applications last month, outpacing the industry’s sales growth. Similarly, Absa confirmed stronger demand for new vehicle financing, while Standard Bank reported comparable growth in applications, although used vehicle

finance demand remained relatively flat. Yet all three indicated that affordability remained a significant obstacle.

Henry Botha, the head of strategy and business analytics at Absa Vehicle Finance, said increased applications had resulted in more approved agreements without any meaningful improvement in approval rates. “This indicates that while consumers remain keen to enter the vehicle market, affordability and credit qualification remain important considerations.”

WesBank spokesperson Lebogang Gaoaketse cautioned that stronger demand should not be mistaken for an improvement in consumers’ ability to qualify for finance. “Household indebtedness, elevated interest rates and rising living and motoring costs continue to affect affordability assessments,” Gaoaketse said.

The data suggests that the market’s recovery is being driven more by purchasing interest and expanding vehicle choices than by a substantial improvement in household finances.

A significant development is the growing influence of Chinese manufacturers, whose competitive pricing and extensive equipment levels are challenging established automotive brands. Another emerging trend is the reliance on extended financing periods.

Gaoaketse said WesBank’s data showed that customers were extending their repayment periods to manage monthly instalments, rather than relying on balloon payments. Average new vehicle repayment terms increased from 72.81 months to 74.17 months, while used vehicle agreements extended from 75.77 to 76.79 months. The proportion of agreements containing balloon payments declined from 35.51% to 26.70%.

Standard Bank also reported growing demand for longer repayment periods, although balloon payment usage remained relatively stable. While longer agreements reduce monthly instalments, they can increase total interest costs and leave motorists indebted for longer.

WesBank also recorded an increase in fixed-rate agreements, from 20.06% to 22.79%, suggesting greater demand for repayment certainty.

The developments come against a challenging economic backdrop. Last month saw inland 95-octane petrol reach R30.25 a litre, placing additional pressure on household budgets. Although government’s temporary fuel levy relief took effect this month, elevated transport costs remain a concern.

Rising fuel prices are also accelerating interest in alternative powertrains. Naamsa reported that 22 389 new energy vehicles were sold during the first nine months of this year, exceeding the entire total of 16 703 units last year.

WesBank recorded a 113% increase in hybrid finance applications, while Standard Bank reported that hybrid applications doubled and electric vehicle applications quadrupled during the third quarter compared with the same period last year. Standard Bank’s Derick de Vries attributed the growing interest partly to fuel price volatility and the availability of more affordable electric vehicles.

However, the growth rates must be considered against relatively small starting volumes, particularly for fully electric vehicles. Charging infrastructure, purchase prices and financing affordability remain important barriers to broader adoption.

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South Africa’s new vehicle market is enjoying a remarkable recovery, but behind the impressive sales figures lies a more complicated picture of financially stretched consumers turning to affordable vehicles, longer repayment periods and fuel-efficient technologies.

The latest figures released by automotive industry body Naamsa show that 61 890 new vehicles were sold last month, representing a 10.4% increase compared with the 56 051 units sold during the corresponding month last year. Passenger vehicles led the growth, with sales increasing 13.6% to 45 084 units, while light commercial vehicle sales rose 2.2% to 13 689 units.

Toyota South Africa Motors maintained its dominance of the domestic market, recording 14 495 sales last month and commanding a 23.4% market share. Suzuki Auto South Africa retained second position, setting a new monthly sales record of 7 292 vehicles, surpassing its previous high of 6 890 units recorded in October last year. Volkswagen maintained third position with 6 515 vehicles sold, while Ford overtook Hyundai, pushing it into fifth place. Hyundai recorded 3 207 sales, including its highest monthly dealer sales since 2022.

However, information from the banks suggests that growing demand does not necessarily mean South Africans are finding it easier to afford new cars.

WesBank reported a 22.3% year-on-year increase in new vehicle finance applications last month, outpacing the industry’s sales growth. Similarly, Absa confirmed stronger demand for new vehicle financing, while Standard Bank reported comparable growth in applications, although used vehicle

finance demand remained relatively flat. Yet all three indicated that affordability remained a significant obstacle.

Henry Botha, the head of strategy and business analytics at Absa Vehicle Finance, said increased applications had resulted in more approved agreements without any meaningful improvement in approval rates. “This indicates that while consumers remain keen to enter the vehicle market, affordability and credit qualification remain important considerations.”

WesBank spokesperson Lebogang Gaoaketse cautioned that stronger demand should not be mistaken for an improvement in consumers’ ability to qualify for finance. “Household indebtedness, elevated interest rates and rising living and motoring costs continue to affect affordability assessments,” Gaoaketse said.

The data suggests that the market’s recovery is being driven more by purchasing interest and expanding vehicle choices than by a substantial improvement in household finances.

A significant development is the growing influence of Chinese manufacturers, whose competitive pricing and extensive equipment levels are challenging established automotive brands. Another emerging trend is the reliance on extended financing periods.

Gaoaketse said WesBank’s data showed that customers were extending their repayment periods to manage monthly instalments, rather than relying on balloon payments. Average new vehicle repayment terms increased from 72.81 months to 74.17 months, while used vehicle agreements extended from 75.77 to 76.79 months. The proportion of agreements containing balloon payments declined from 35.51% to 26.70%.

Standard Bank also reported growing demand for longer repayment periods, although balloon payment usage remained relatively stable. While longer agreements reduce monthly instalments, they can increase total interest costs and leave motorists indebted for longer.

WesBank also recorded an increase in fixed-rate agreements, from 20.06% to 22.79%, suggesting greater demand for repayment certainty.

The developments come against a challenging economic backdrop. Last month saw inland 95-octane petrol reach R30.25 a litre, placing additional pressure on household budgets. Although government’s temporary fuel levy relief took effect this month, elevated transport costs remain a concern.

Rising fuel prices are also accelerating interest in alternative powertrains. Naamsa reported that 22 389 new energy vehicles were sold during the first nine months of this year, exceeding the entire total of 16 703 units last year.

WesBank recorded a 113% increase in hybrid finance applications, while Standard Bank reported that hybrid applications doubled and electric vehicle applications quadrupled during the third quarter compared with the same period last year. Standard Bank’s Derick de Vries attributed the growing interest partly to fuel price volatility and the availability of more affordable electric vehicles.

However, the growth rates must be considered against relatively small starting volumes, particularly for fully electric vehicles. Charging infrastructure, purchase prices and financing affordability remain important barriers to broader adoption.