This shift in consumer behaviour comes as the country’s new vehicle market continues to demostrate resilience despite rising fuel prices, growing inflation risks and higher borrowing costs.
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South African consumers are becoming increasingly cautious and calculated when purchasing new vehicles, with affordability, fuel efficiency and long-term ownership costs now playing a bigger role in buying decisions than ever before.
This shift in consumer behaviour comes as the country’s new vehicle market continues to demostrate resilience despite rising fuel prices, growing inflation risks and higher borrowing costs.
According to the latest vehicle sales data released by the Automotive Business Council (naamsa), consumers remain active in the market, but their purchasing decisions are being driven more by value and practicality than discretionary spending.
Naamsa on Monday reported that domestic new vehicle sales reached 51,071 units in May, the strongest May performance since 2013, representing an increase of 5,784 units from April, and an increase of 12.8% compared to the 45,287 vehicles sold in the same month last year.
Exports remained under pressure in May, with vehicle export sales reaching 29,392 units, down 1,467units, or 4,8%, compared to the 30,859 units exported in the corresponding month last year.
While strong domestic new vehicle sales figures point to healthy demand, the underlying reasons behind purchases reveal a changing consumer mindset.
“Consumers continued to engage the market in a measured and informed manner, placing greater emphasis on affordability, financing costs, fuel efficiency, vehicle utility, safety and long-term ownership value,” naamsa said.
The trend reflects the growing financial pressures facing households as fuel prices rise and interest rates move higher.
South Africa’s economic environment has become more challenging in recent months. Following a sharp rise in global oil prices, domestic fuel costs increased significantly during April and May, contributing to inflation reaching 4.0% year-on-year in April.
In response, the South African Reserve Bank increased the repo rate by 25 basis points to 7.0%, lifting the prime lending rate to 10.5%. For consumers looking to buy vehicles, these developments have important consequences.
Since most new vehicles are financed through credit agreements, higher interest rates directly increase monthly instalments. Combined with rising fuel costs, vehicle buyers are now carefully assessing both the purchase price and the ongoing cost of ownership before making a decision.
Industry analysts said this environment is encouraging consumers to compare financing packages more closely, consider fuel-efficient models and keep vehicles for longer periods.
Brandon Cohen, national chairperson of the National Automobile Dealers Association (NADA), said dealers were seeing evidence of consumers becoming increasingly value-conscious rather than withdrawing from the market altogether.
"Customers are spending more time evaluating options, comparing finance offers and considering total cost of ownership before committing to a purchase," Cohen said.
"Fuel prices and running costs remain important considerations for buyers, particularly in the volume segments of the market. Affordability is increasingly influencing purchasing decisions, with consumers paying closer attention to fuel efficiency, maintenance costs and overall value."
According to naamsa, the growing focus on value is also helping to boost interest in new-energy vehicles (NEVs). Naamsa noted that NEV sales in April were 120% higher than during the same period a year earlier, suggesting that more buyers are considering alternatives that could reduce long-term fuel expenses.
Ryan Seele, an executive member of NADA, concurred that dealers were seeing growing interest in alternative propulsion technologies.
"We are seeing a noticeable increase in discussions around hybrid and electric vehicles," Seele said.
"Consumers are asking more informed questions about fuel savings, operating costs and long-term ownership benefits. While new energy vehicles still account for a relatively small portion of overall sales, awareness and consideration levels have increased significantly."
However, industry participants remain cautious about the months ahead as the price of petrol increased by R1.43 per litre in June though diesel eased by between R2.61 and R3.24 per litre.
Higher fuel prices and borrowing costs are expected to place increasing pressure on affordability, particularly for first-time vehicle buyers and small business owners. Commercial fleet operators are also likely to face higher operating expenses as transport and logistics costs rise.
Cohen said the coming months would provide a clearer indication of how higher borrowing costs affect consumer behaviour.
"The challenge for the remainder of the year will be whether consumers can continue to absorb higher financing costs and rising living expenses," he said.
"For now, however, the market's performance demonstrates that South Africans continue to prioritise mobility, even in a demanding economic environment," he said.
BUSINESS REPORT