Car purchases grew 12.8% year on year in May, the countrys automotive industry association has said

South Africa's new vehicle market maintained its upward momentum in May, recording its strongest monthly sales performance since 2013, the country's automotive industry association has said.

According to the Automotive Business Council, aggregate new vehicle sales increased by 12.8% year-on-year to 51,071 units. The result extended the market's run of consecutive monthly growth and kept year-to-date sales firmly in positive territory.

WesBank Senior Economist Thanda Sithole said the performance was encouraging, with growth driven primarily by the passenger vehicle segment while commercial vehicle sales also remained positive.

Passenger car sales rose 16.3% to 36,871 units. Dealer sales accounted for 90.1% of total volumes, while the vehicle rental industry contributed 5.3%, indicating demand across multiple sales channels.

WesBank's financing data also pointed to stronger consumer confidence. Finance applications exceeded levels recorded during the same period last year, particularly for new vehicles. Average deal sizes for both new and used vehicles also increased, suggesting consumers were financing higher-value vehicles.

Despite the positive sales momentum, Sithole warned that affordability pressures are likely to remain a key consideration for households and businesses.

The South African Reserve Bank increased the repo rate by 25 basis points to 7.00% at its May meeting, pushing the prime lending rate to 10.50%.

Sithole said higher monthly repayments could affect affordability, particularly for first-time buyers and smaller business operators, and encouraged consumers to fully understand the impact of interest rate changes before entering into finance agreements.

Fuel costs are also expected to place additional pressure on consumers. Petrol prices are set to increase from 4 June, driven by movements in global oil prices and the partial reversal of temporary fuel levy relief introduced in April.

While higher financing costs and fuel prices may weigh on demand, the vehicle market has shown resilience through a challenging economic period. Improved household and business confidence, ongoing vehicle replacement cycles and fleet renewal activity continue to support sales across segments.

With the restoration of the fuel levy still to come in July and the possibility of further interest rate adjustments later in the year, the automotive sector enters the second half of 2026 with strong recovery momentum but a more challenging operating environment.

First published by IOL

(RT.com)