South Africa's Vehicle Industry: Latest Trends, Challenges, and Innovations

In a recent Power Lunch Southern Africa episode, CNBC Africa delved into the current state of South Africa's vehicle industry, highlighting the latest trends, challenges, and innovations. The discussion was anchored around the Q2 2024 Vehicle Price Index report published by TransUnion Africa, which revealed a 6% decline in new vehicle sales and a 6.1% drop in total vehicles financed from the previous quarter.?

The report also noted a rise in the adoption of electric vehicles (EVs), driven by younger consumers and innovations in vehicle financing.

Myself and Lee Naik , CEO of TransUnion Africa, provided valuable insights into the factors influencing vehicle prices and the market's future trajectory. Lee pointed out that while inflation and interest rates are easing, and supply chain disruptions from the pandemic are subsiding, the South African market is not yet seeing a significant drop in new vehicle prices. He emphasised that the recent 25 basis point cut in interest rates has only marginally reduced household repayments, indicating that more substantial relief might be expected towards mid-December 2025.

The preference for used vehicles, noting that the average price of a used car on AutoTraderSA 's platform is just over R400,000. While used vehicle prices have seen minimal increases, the market remains robust, with many consumers opting for financing over cash purchases. This trend is particularly evident in the growing interest in hybrid and electric vehicles, with 60% of consumers planning to finance their next vehicle within three years, as recently published in our New Energy Vehicle Report

The conversation also touched on the nascent stage of EV adoption in South Africa. Lee mentioned a 5% increase in EV sales in Q2 2024, driven by younger, environmentally conscious consumers. However, he noted that high prices, range anxiety, and inadequate public infrastructure are significant barriers to widespread EV adoption. Even tho there is pent-up demand for EVs; the market is currently dominated by hybrid vehicles, which offer a more affordable and practical alternative.

Innovative vehicle financing models, such as rent-to-buy and subscription-based services, are also gaining traction, particularly among younger consumers who face challenges accessing traditional financing. Lee highlighted the rise of micro-mobility solutions, such as smaller vehicles and ride-hailing services, as viable options for a population seeking affordable and flexible transportation.

In conclusion, while South Africa's vehicle industry faces several challenges, the market is evolving with innovative solutions and a growing interest in sustainable transportation options.