Passenger car buyers in South Africa appeared undeterred by prevailing economic concerns, as evidenced by the February retail vehicle sales figures.
“Passenger car buyers in South Africa seemed undeterred by some of the economic concerns being flagged currently by the local media if one studies the retail vehicle sales figures for February, which show car sales up by 17.1% when compared to February 2024,” said Brandon Cohen, Chairperson of the National Automobile Dealers’ Association (NADA).
Several economic disrupters were at play last month.
“These disrupters included the delayed announcement of the national budget, concerns about the future of trade with the United States, and an ongoing lack of confidence in the business sector. The latter concern continued as sales of light commercial vehicles decreased by 11.3% in February, although part of this fall in volume can be attributed to a shortage of stock from some of the brands. The important heavy and extra-heavy truck segment was 12.5% lower than in the corresponding month last year, which is also concerning. Medium trucks, which is a small market, recorded a sales increase of 11.5%, ,” explained Cohen.
A notable trend in the market is the growing presence of OEMs competing in the entry and lower segments of the market in the top 10 rankings, with brands such as Suzuki, Hyundai, Kia, Mahindra and Chery gaining traction. This shift suggests that affordability is playing a key role in driving unit sales, enabling consumers who previously could not afford a new vehicle to enter the market. Additionally, a 0.25% decrease in interest rates at the end of January as well as speculation over a potential VAT increase may have encouraged some buyers to expedite their purchases.
“Another reason for the surge in new car buying could have been that February is the end of a tax year for many companies, and those who still have money in their budgets tend to buy before the end of this period”.
The pre-owned vehicle market also continues to grow, attracting increasing interest from buyers. “One area showing growth and attracting interest from potential buyers is the pre-owned market, with TransUnion reporting that used car financing in the fourth quarter of 2024 outpaced new car financing by a ratio of 1.56:1, which is up from 1.23:1 in the fourth quarter of 2023. We have also noticed that buyers of pre-owned models are also downsizing and opting for cheaper, non-premium brand vehicles, which are more affordable for strained household budgets,” added Cohen.
Dealers had a strong month in February, accounting for 84.1% of the 47,978 vehicles sold. The rental market remained robust, contributing 11.1% to total sales and representing 14.6% of the 33,757 passenger cars sold. However, export figures once again disappointed, with volumes declining by 12.3% to 34,565 units. The challenges facing the export market remain a critical issue for the industry as stakeholders continue to monitor global trade dynamics and economic trends.
