Fuel price cuts set to boost new vehicle sales after strong start to 2026

Declining fuel prices are expected to fuel rising new vehicle sales in South Africa in February after the market entered 2026 on a firm footing, with sales momentum from last year carrying decisively into the new year, according to the Automotive Business Council (Naamsa).

This comes as the Department of  Mineral and Petroleum Resources on Monday announced that petrol prices will fall by 65 cents per litre, while diesel will drop by between 50 and 57 cents, which will push petrol prices to their lowest levels in four years.

Naamsa on Monday said aggregate domestic new vehicle sales rose to 50 073 units in January, reflecting an increase of 3 479 vehicles, or 7.5%, compared to the 46 594 units sold the same month a year ago.

Export sales also edged higher, increasing by 136 units, or 0.6%, to 24 568 vehicles over the same period.

Naamsa said the January performance pointed to a material improvement in underlying demand conditions rather than a simple base effect. The industry body attributed the stronger showing to moderating inflation, broadly stable macroeconomic conditions and continued resilience among consumers.

Naamsa noted that light commercial vehicle demand continues to mirror conditions in the goods-producing sectors of the economy, which remain constrained but are showing signs of gradual stabilisation.

Demand continues to be concentrated in the sub-R400 000 price bracket, reinforcing the importance of affordability in the current economic environment.

In contrast, the medium and heavy commercial vehicle segments remained under pressure. Medium commercial vehicle sales declined by 5.9% year-on-year to 542 units, while heavy trucks and buses fell by 4.3% to 1 345 units.

Ryan Seele, executive committee member of the National Automobile Dealers’ Association (NADA), noted that January sales figures are traditionally slightly distorted, as many vehicle purchases are concluded in December for delivery in the new year, often supported by year-end incentives from original equipment manufacturers (OEMs).

"This is a welcome and encouraging sign for the local motor industry at a time when both the domestic and global economies remain in a state of flux," Seele said. 

“While 2025 exceeded most expectations, January has continued with a strong set of numbers, which suggests that these results reflect genuine market momentum rather than a seasonal anomaly. January typically sees a moderation in volumes, but this year has clearly proven different." 

According to Naamsa, fleet replacement decisions remain closely tied to infrastructure investment trends, logistics performance, electricity costs and confidence in the broader investment outlook.

On the export front, vehicle shipments benefited from currency stability and easing imported input cost pressures. However, naamsa cautioned that the outlook is becoming increasingly complex amid rising protectionism in several key export markets.

The industry body warned that the proliferation of trade-restrictive measures, evolving industrial policies in advanced economies, and deepening trade and industrial arrangements between Western and Eastern blocs could pose risks to South Africa’s automotive export competitiveness and market access.

"These developments underscore the growing importance of cost competitiveness, and policy certainty in sustaining South Africa’s export performance over the medium to long term," said Naamsa.

From a macroeconomic perspective, Naamsa highlighted a markedly improved inflation and monetary policy environment. Headline consumer inflation remains well anchored within the South African Reserve Bank’s target range, while long-term inflation expectations are at multi-year lows.

The rand’s appreciation to multi-year highs against the US dollar has further reduced imported inflation pressures and helped moderate vehicle price increases.

Looking ahead, Naamsa said the industry is awaiting the finalisation of the comprehensive review of South Africa’s automotive policy framework, which it views as critical to long-term competitiveness, investment attractiveness and resilience.

Lebo Gaoaketse, head of marketing and communication at WesBank, said the health of the new vehicle market reflects continued consumer affordability which is underpinned by the fact that inflation remains anchored within the Reserve Bank's target range, with long-term expectations at multi-year lows.

“The repo rate held holding at 6.75% in January and looming potential cuts in March should give consumers some cautious optimism. If the rand's appreciation to multi-year highs against the dollar remains stable, it will help moderate vehicle prices,” said Gaoaketse.

“The market has positioned itself well for 2026, but important decisions lie ahead. Tariff decisions often have significant ripple effects. Ensuring the continued growth of the sector means balancing the needs of the consumer and the industry.”

BUSINESS REPORT