KEY POINTS
- South Africa’s new vehicle market posted its strongest June performance in 19 years, even as household finances remain under pressure.
- Chinese automakers have lifted their market share from near zero to almost 20%, but legacy brands including Toyota, Hyundai, Volkswagen, Suzuki and Ford continue to rank among the country’s top sellers.
- Buyers are increasingly focusing on total cost of ownership, including insurance, servicing, parts availability and resale value, rather than upfront affordability alone.
- Dealers say intensifying competition is squeezing margins, while hybrid adoption and the staying power of new market entrants will be key themes to watch through year-end.
South Africa’s new car market recorded its best June sales in 19 years, as stronger consumer demand and intensifying competition across price points supported volumes, even while buyers remained under financial strain and looked beyond headline purchase prices to longer-term ownership costs.
Speaking to CNBC Africa, Brandon Cohen, chairperson of the National Automobile Dealers Association, said the current narrative around South Africa’s vehicle market has become too narrowly focused on the rise of Chinese brands.
Chinese automakers have been one of the clearest growth stories in the sector, with their share of the market climbing from almost zero a few years ago to nearly 20%, according to Cohen. But he said the monthly sales data still show that established brands such as Hyundai, Toyota, Volkswagen, Suzuki and Ford remain firmly entrenched among the top five sellers.
That suggests the market is not being driven by one trend alone. Instead, buyers are navigating a broader mix of pricing, financing, technology and after-sales considerations as competition expands.
“So the Chinese vehicles absolutely have been the main idea,” Cohen said. “But if we look through the numbers and we look every single month, what we can see is that those perennials, as you said, the Hyundais, the Toyota, VW, Suzuki, Ford, they’re still there in the top five brands every single month.”
Cohen said affordability remains central to the market, but increasingly not just at the point of purchase. Consumers are paying closer attention to what the industry calls total cost of ownership — a calculation that includes fuel or running costs, insurance premiums, maintenance, service plans, the availability of replacement parts and a vehicle’s residual value after several years.
That shift is particularly important in a market where many buyers are under pressure from elevated living costs and borrowing expenses. Rather than simply looking for the lowest upfront price, customers are also assessing whether a vehicle will remain economical to own over three to five years.
“People are looking and researching, and there’s a lot that goes into more than just buying the vehicle,” Cohen said. “How much does it cost to run? What’s the insurance on that vehicle? Are there crash parts available for the vehicle? What’s going to happen in three years, five years and so forth down the line?”
Financing structures are also becoming more important in purchase decisions. Cohen said buyers are increasingly comparing guaranteed future value products, discounting, service and maintenance packages, and extended warranties as part of the overall value proposition.
The pressure point for most of the market remains concentrated below 400,000 rand ($22,300), where Cohen said the majority of consumers are shopping. He estimated that roughly 65% of buyers, regardless of age, gender or race, are looking in the sub-400,000-rand segment.
That concentration is helping to explain why competition has intensified so sharply. More brands are targeting the same affordability band, which has benefited consumers but made life tougher for dealers and some manufacturers.
Sales may be improving, Cohen said, but the broader market is not expanding at a pace that would absorb every new entrant without pressure. As a result, dealers are facing tighter margins and may have to trim pricing or add incentives to secure transactions.
“The more the competition, now that’s a good thing for the consumer, for sure,” Cohen said. “And it also forces all the traditional brands to sharpen their pencils, come up with something new, new pricing, whatnot.”
He added that dealers are leaning more heavily on recurring revenue and support services to sustain profitability. That includes servicing, maintenance plans, warranties, customer support and the strength of the dealership network, rather than relying only on margin at the point of sale.
The weakness is not evenly spread across the market. Cohen said premium and luxury marques are under heavier strain because they cannot easily compete in the lower-priced segments where demand is deepest.
BMW, he said, has shown some improvement and appears to be recovering ground. But ultra-luxury and premium brands such as Audi and Mercedes-Benz remain under significant pressure, reflecting a narrower buyer base and less flexibility to chase entry-level demand.
Some smaller legacy brands are also finding the environment difficult. Cohen pointed to names such as Honda and Mazda, saying they remain present in the market but often compete in narrower niches and lack the model breadth to match rivals across price, specification and segment.
The demand split across demographics has also become flatter than in the past. Cohen said financial strain has reduced the differences in vehicle preferences across income groups and other consumer categories, with affordability emerging as the dominant filter before brand and lifestyle considerations come into play.
Younger buyers still tend to prioritize in-car technology, styling and color, particularly among first-time purchasers. Older buyers, by contrast, are placing more emphasis on durability, reliability and the availability of parts and body repair support after warranties expire.
Looking ahead, Cohen said the market’s near-term direction will depend heavily on macroeconomic variables including oil prices and interest rates. Continued sales growth would likely require some relief on those fronts, especially given broader signs of strain on household finances.
He also said the industry will be watching the adoption of new energy vehicles, particularly hybrids. Fully electric vehicles have yet to achieve broad-based momentum in South Africa, but hybrids appear to be gaining more practical traction in the current market.
“I don’t think we’re quite there yet with electric, but hybrid, I think we’re doing well,” Cohen said.
Another key question for the rest of the year is how many brands the market can sustainably support. If sales volumes do not rise meaningfully alongside the influx of new entrants, competitive pressure could intensify further, particularly for smaller or more niche players.
That leaves the South African auto sector with a more nuanced outlook than headline sales figures alone suggest. June’s strong performance underscores resilient demand, but the market is being shaped as much by consumer caution, financing structures and after-sales economics as by the arrival of cheaper new brands.
For dealers and manufacturers, the next phase may depend less on who can offer the lowest sticker price and more on who can prove lasting value in an increasingly crowded market.