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Recovery gains traction but headwinds persist

Sep 17, 2025 TransUnion, Mobility Insights Report, Lee Naik,


Recovery gains traction but headwinds persist

 

TransUnion’s latest Mobility Insights Report shows SA’s automotive market building momentum in 2025, supported by a favourable interest rate environment, record-low new-vehicle inflation, and liquidity from the the two-pot pension reform. While recovery is underway, the outlook remains fragile, with affordability constraints and export headwinds threatening longer-term growth.

 

The South African Reserve Bank has cut interest rates five times since September 2024 and inflation has returned to the lower end of the 3-6% band, providing households with some relief. Consumer confidence has improved among middle- and higher-income groups, although low-income consumers continue to face pressure from food and electricity costs. “These macro shifts provide short-term support to the vehicle market, but momentum is likely to taper in 2026 without further reforms,” said Lee Naik, CEO of TransUnion Africa.

 

Passenger car sales broke through the 35,000-unit ceiling for the first time in years, with July and August 2025 marking the strongest volumes since 2014. According to Naamsa, new passenger car sales grew 22.5% year-over-year (YoY) in Q2, fuelled by lower borrowing costs, aggressive OEM incentives and the entry of new value-focused brands.

 

Chinese automakers continued their rapid growth, expanding market share from 3.1% in 2022 to nearly 15% in Q2 2025. Their affordable, tech-rich SUVs and expanding dealer networks are reshaping competition, forcing legacy OEMs to rethink pricing, features, and model cycles. Toyota retained overall leadership, with Suzuki securing second place for the second consecutive quarter.

 

“Improved affordability, aggressive incentives and growing demand for value brands, alongside modest support from two-pot withdrawals, helped sustain momentum through 2025. However, as interest rates remain elevated and credit conditions tighten, and the two-pot effect normalises, growth is expected to moderate in 2026, with export risks and rand volatility adding uncertainty,” said Naik.

 

Natis data shows new registrations rising 20% YoY in Q2 2025, led by Northern Cape, Free State and Northwest. In contrast, used registrations declined by 1.4%, reflecting pressure in that segment. Across all vehicle sales, the Used-to-New Vehicle Registration Ratio rose to 3.2 in Q2, up from 2.5 in Q1, indicating a quarter-on-quarter increase in the relative share of used vehicle registrations. However, this remains below the 3.8 ratio seen through much of 2024, suggesting that new vehicles have regained some ground YoY. While used vehicles continue to dominate overall registrations, the market has shifted slightly back toward new vehicles compared to last year. This nuanced divergence presents opportunities for OEMs and dealer networks, while independent used dealers continue to face headwinds.

 

While domestic momentum improves, passenger vehicle exports fell 24.6% in Q2 2025 due to softer global demand and new US tariffs of up to 30%. Premium models, heavily reliant on the US and European markets, are under pressure, raising concerns for production, jobs, and investment.

 

The September 2024 two-pot retirement reform injected liquidity into households, with evidence from the Bureau of Market Research suggesting a direct impact on mobility demand, particularly in the used car market. While withdrawals were generally insufficient to fund deposits for new vehicles, they provided meaningful support to affordability-driven used vehicle purchases.

 

The reform is offering short-term relief rather than long-term wealth extraction, with withdrawals largely used for deposits, consumption, or debt repayment. Generational differences are evident: Millennials (aged 29 to 44) and younger Gen X (aged 18 to 28) are the most active claimants, while Baby Boomers withdraw minimally. Repeat withdrawals are becoming more common, suggesting both ongoing financial strain and the emergence of a recurring source of liquidity for entry-level and mid-market segments. Two-pot withdrawals were not the only factor lifting sales,” noted Naik. “But the timing, scale and claimant profile suggest they acted as a meaningful catalyst for incremental used-car purchases.”

 

Looking ahead, TransUnion advises that OEMs, dealers and lenders recalibrate strategies to balance domestic opportunities with external risks. Industry participants should align campaigns with liquidity cycles, planning promotions and stock availability around expected two-pot withdrawal windows. 

 

Affordability must remain the priority, with a sharpened focus on value brands, certified pre-owned vehicles, and models that deliver a strong total cost of ownership. Financing solutions should also evolve, offering deposit support, trade-in boosters, and more flexible terms, while carefully monitoring repayment behaviour to manage post-purchase risk.

 

At the same time, leveraging data-driven insights, integrating credit and registration analytics to identify liquidity-sensitive buyers, preapprove customers, and track repayment performance, will be critical for sustaining growth in an uncertain environment.

 

“South Africa’s auto market is regaining momentum, but it’s a fragile recovery,” said Naik. “Those who time offers to policy-driven liquidity, sharpen affordability, and manage risk proactively will be best placed to capture growth.”

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