By Otsile Kadiege

South Africa’s automotive industry is riding a wave of strong domestic momentum as 2025 enters its second half. Despite global trade challenges, local new vehicle sales surged in July, delivering the highest monthly total since October 2019 and reinforcing the sector’s role as a key driver of the economy.

Domestic sales reach six-year high

July 2025 saw 51,383 new vehicles sold, a 15.6% increase from the 44,452 units sold in July 2024.

Dealer sales: 83.1%

Rental industry: 11.1%

Government: 3.1%

Corporate fleets: 2.7%

Passenger car sales were the standout, reaching 36,248 units, the best monthly performance since January 2017, boosted by rising consumer confidence and a rebound in disposable incomes. Car rental companies contributed 14% of these sales, reflecting strong tourism activity.

Light commercial vehicles, including bakkies and minibuses, posted 12,356 units sold, up 6.9% year-on-year, while medium trucks grew by 13.9%. Heavy trucks and buses, however, dipped slightly by 1.3%.

Monetary policy and consumer confidence fuel growth

The South African Reserve Bank’s 25 basis-point repo rate cut to 7.00% in July is expected to further stimulate demand.

Headline inflation: 3.0% in June

Core inflation: 2.9%

Easier credit conditions, improved logistics, and pension reforms have unlocked more liquidity for big-ticket purchases like vehicles, giving the market an added boost.

Export market faces headwinds

While local sales are thriving, vehicle exports fell 1.9% year-on-year to 35,379 units in July 2025. Year-to-date exports remain 2.5% higher than 2024, thanks to diversified markets in over 109 countries. However, US tariffs are a mounting concern.

The re-imposition of 30% US tariffs on South African exports from 7 August 2025, following the earlier 25% automotive tariffs, has hit hard: vehicle exports to the US dropped 82.2% in the first half of 2025 compared to 2024.

This decline threatens production, supplier networks, and thousands of jobs in export-reliant hubs like East London and Gqeberha.

Naamsa CEO Mikel Mabasa warned that these trade barriers pose a serious competitiveness challenge, but emphasized the sector’s commitment to diversifying into Africa and Asia and accelerating South Africa’s NEV (New Energy Vehicle) transition.