By Malusi Msomi

South Africa’s new vehicle market showed strong growth in August 2025, reaching its highest sales levels since October 2019. According to naamsa, domestic demand continues to lead the automotive sector’s recovery, while export channels face ongoing challenges from global trade conditions and US tariff uncertainty.

Strong growth in domestic sales

Aggregate new vehicle sales climbed to 51,880 units in August, an increase of 8,188 units (18.7%) compared to the 43,692 units sold during the same month in 2024. This growth was supported by an influx of affordable models, improved consumer confidence, favorable credit conditions, and steady gains in household income.

Of the total sales, an estimated 83.3% (43,196 units) went through dealer channels. Rental companies accounted for 12.1%, while 2.3% went to corporate fleets and 2.3% to government.

Passenger cars drive the market

The passenger car segment was the biggest contributor to growth. Sales rose to 36,914 units, the highest level since September 2015. This represents a 22.5% increase compared to 30,128 units sold in August 2024. Car rental companies made up 15% of these sales, reflecting strong demand from the tourism and travel sectors.

Light commercial vehicles, including bakkies and minibuses, also performed well with 12,326 units sold, a 15.1% increase over the 10,710 units in August 2024.

Medium and heavy commercial vehicle sales, however, recorded declines. Medium truck sales dropped by 3.9% to 717 units, while heavy truck and bus sales fell by 8.8% to 1,923 units.

Interest rate cuts and better credit conditions support growth

The South African Reserve Bank’s decision in July to lower the repo rate by 25 basis points to 7.00% helped boost confidence and reduce financing costs for both consumers and dealers. Improved credit conditions also played a role, with household credit extension up 3.1% year-on-year in June, while private-sector credit growth reached 5.0% year-on-year.

These trends, combined with a recovery in real disposable incomes, created a favorable environment for new vehicle purchases throughout August.

Inflation and fuel prices remain balanced

Headline inflation edged up slightly in July, with CPI rising to 3.5% year-on-year, while core inflation moved to 3.0%. Fuel price changes in early August had a mixed impact: petrol dropped by 28 cents per litre, while diesel prices rose by 63 to 65 cents per litre. Brent crude oil remained stable at around US$68 to US$69 per barrel, providing some relief for consumers even as logistics costs increased for businesses.

Vehicle exports show modest gains

Exports grew by 6.2% in August to 37,500 units, up from 35,310 units in August 2024. Year-to-date, exports are 3.0% higher than last year. However, challenges remain as the sector adapts to higher tariffs in the US and increased competition in traditional export markets. Automakers are expected to continue exploring new markets and alternative trade routes to mitigate these risks.