Confidence has returned in South Africa’s automotive industry after new vehicle sales rose by 7.3% in February compared to the same month a year ago on the back of easing inflation, a lower interest rate environment, and improving consumer sentiment.

The Automotive Business Council (Naamsa) on Monday reported that aggregate domestic new vehicle sales in February 2025 totalled 47 978 units, reflecting an increase of 3 229 units, compared to the 44 749 vehicles sold in February 2024.

The February 2025 new passenger car market at 33 757 units had registered an increase of 4 900 cars, or a gain of 17.0%, compared to the 28 857 new cars sold in February 2024.

Car rental sales accounted for a sound 14.6% of new passenger vehicles sales during the month.

According to Naamsa, private sector credit extension accelerated to 4.9% year-on-year in January, signalling increased liquidity and financing appetite, while employment gains of 132 000 in the fourth quarter of 2024 bolstered disposable incomes, supporting consumer spending.

Naamsa said these factors contributed to the strong growth in the passenger car segment, which saw a 17.0% year-on-year increase.

The automotive sector, however, experienced a contrasting performance in the commercial vehicle market. Domestic sales of light commercial vehicles, which include bakkies and mini-buses, fell sharply, with 11 802 units sold—a decline of 11.3% or 1 504 units from the 13 306 vehicles sold in the same month last year.

Export sales also echoed these concerns, dropping 8.6% to 34 656 units compared to 39 517 units exported in February 2024.

Naamsa said February 2025 was a defining month for South Africa’s new vehicle market, reflecting both resilience in domestic sales and headwinds in the export segment.

Naamsa CEO Mikel Mabasa said while economic fundamentals remained broadly supportive, challenges emerged in external trade conditions and certain vehicle categories.

“The 75- basis-point rate cut since September, coupled with expectations of further monetary easing, continued to improve vehicle affordability and stimulate demand,” Mabasa said.

New vehicle sales are seen as a good indicator of prevailing economic and financing conditions, as well as consumer sentiment amidst .

Lebo Gaoaketse, head of marketing and communication at WesBank, concurred that the three consecutive downward interest rate adjustments have provided a 0.75% relief in prime lending rates.

“While further expected cuts would continue to address affordability and stimulate market activity, other inflationary increases, including electricity tariffs and fuel prices, persist and have many economists questioning the expected pace of interest rate cuts, warning there may be fewer cuts throughout the year than previously envisioned,” Gaoaketse said.

“2025 sales have certainly come out of the starting blocks with gusto. The market will be hoping for stamina at similar levels, but affordability remains high on South African consumers’ budget considerations and could still trip up this early growth momentum.”

A notable trend in the market is the growing presence of Original Equipment Manufacturers competing in the entry and low segments of the market in the top 10 rankings, with brands such as Suzuki, Hyundai, Kia, Mahindra and Chery gaining traction.

According to the National Automobile Dealers’ Association (NADA), this shift suggested that affordability was playing a key role in driving unit sales, enabling consumers who previously could not afford a new vehicle to enter the market.

NADA chairperson Brandon Cohen said passenger car buyers in South Africa seemed undeterred by some of the economic concerns amid several economic disrupters at play last month.

“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,” Cohen said.

“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.”

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