Domestic vehicle sales in South Africa saw a robust recovery in May with 45,308 units sold, marking an increase of 8,169 vehicles or a substantial 22.0% from 37,139 units in May 2024.
“The automotive sector finds itself once again at the coalface of global economic shifts,” said naamsa CEO Mikel Mabasa.
“The SARB’s latest decision to lower interest rates is both timely and commendable. It directly supports consumer affordability and boosts production competitiveness at a time when global uncertainty is weighing heavily on our export markets. While the new tariff measures remain a concern, our industry has proven its resilience time and time again,” Mabasa said.
Sales overview
Overall, out of the total reported industry sales of 45,308 vehicles, an estimated 40,062 units, or 88,4%, represented dealer sales, an estimated 6,8% represented sales to the vehicle rental industry, 3,0% to industry corporate fleets, and 1,8% to government sales.
The May 2025 new passenger car market at 31,741 units had registered an increase of 7,322 cars, or a gain of 30,0%, compared to the 24,419 new cars sold in May 2024.
Car rental sales accounted for 8,5% of new passenger vehicle sales during the month.
Domestic sales of new light commercial vehicles, bakkies and mini-buses at 10,938 units during May 2025 had recorded an increase of 601 units, or a gain of 5,8%, from the 10,337 light commercial vehicles sold during May 2024.
Sales for medium and heavy truck segments of the industry reflected a sound performance in May 2025 and at 660 units and 1,969 units, respectively, recorded an increase of 122 units, or 22,7% from the 538 units sold in May 2024 in the case of medium commercial vehicles, and, in the case of heavy trucks and buses an increase of 124 vehicles, or 6,7%, compared to the 1,845 units sold in the corresponding month last year.
“The Sarb’s May decision will add further momentum to these gains, as consumers respond positively to improved credit conditions.The macro-economic environment became more conducive to supporting consumer spending and business investment. The Sarb’s downward revision of oil price forecasts further contributed to a benign inflation backdrop. In this context, the rate cut offers tangible relief to households, enhancing vehicle affordability through lower financing costs,” naamsa stated.
Manufacturing
For South Africa’s automotive manufacturing base, the implications of the cut extend beyond retail credit conditions.
Lower interest rates will reduce borrowing costs for manufacturing, supporting planned capital expenditure, tooling upgrades, and retooling for new models. Importantly, with lower inflation expectations now anchored, the real cost of capital is declining, offering a pathway to revive much-needed investment in the sector.
“In line with the recently tabled “National Budget 3.0,” which reasserted government’s commitment to fiscal consolidation, the Sarb’s policy action demonstrated that price stability and growth need not be mutually exclusive,” naamsa further said.
“Geopolitical tensions and lingering tariff risk underscore the need for local policy agility. Access to affordable capital will remain a critical enabler as the industry adapts to shifting global supply chains and trade regimes. The May policy decision, therefore, represents a vital step toward strengthening the sector’s resilience,” naamsa said.
Not all indicators moved in the right direction.
Vehicle export sales decreased by 5,165 units, or 14,6%, to 30,112 units in May 2025 compared to the 35,277 vehicles exported in May 2024 vehicle exports for the year to date were still 1,4% ahead of the same period last year.
“The decrease in exports during the month could be attributed to a major exporting OEM halting production from mid-April to mid-May to complete the remaining 40% of the required installations and upgrades in the body shop, paint shop, and final assembly areas in preparation for a new model introduction. The fragility of global demand in the face of rising protectionism is increasing and highlighted the importance of maintaining export competitiveness through policy alignment, market diversification, and value-chain resilience,” naamsa said.
Rate cut a move in right direction
Brandon Cohen, Chairperson of the National Automobile Dealers’ Association (NADA) said while the rate cut was not a dramatic kick-start to the economy, it does serve as a much-needed nudge in the right direction.
“This rate cut is a positive move at a time when South African consumers are under immense financial pressure,” Cohen said.
Historically, it takes several months before we see the effects of a rate movement reflected in vehicle sales. A rate cut helps to build consumer confidence and creates slightly more room for discretionary spending,” Cohen said.
He added that interest rate relief alone won’t be enough to drive a strong recovery.
“Sustained economic strain and high unemployment remain significant barriers to growth in the automotive sector. Had the rates held steady, it would have reinforced the pressure on already cautious consumers. Any positive shift is welcome – but the road to recovery will require more than just lower interest rates,” Cohen added.
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