Motor trade sales rise as easing inflation and lower rates lift demand

South Africa’s motor trade sales grew by 1.9% year-on-year in August 2025, according to the latest figures released by Statistics South Africa (Stats SA) on Thursday, reflecting steady improvement in the country’s automotive sector.

The growth was largely driven by a 9.4% rise in new vehicle sales, which contributed 2.4 percentage points, and a 4.8% increase in sales of accessories, contributing 0.9 of a percentage point.

Stats SA said that seasonally adjusted motor trade sales rose 0.5% month-on-month in August, following increases of 0.9% in July and 0.4% in June.

Over the three months ending August 2025, motor trade sales were up 2.8% compared with the same period in 2024.

The main drivers of this quarterly improvement were 10.2% in new vehicle sales, 6.4% in sales of accessories, and 2.5% increase in used vehicle sales: up 2.5%, contributing 0.5 of a percentage point.

Seasonally adjusted data for the same three-month period showed a 1.5% increase compared with the previous three months, with growth led by used vehicle sales, new vehicle sales, and accessory sales.

Professor Waldo Krugell, an economist at North-West University, said that the motor industry was doing almost unexpectedly well.

“The lower interest rates over the past year are helping and lower inflation on average also means there is less pressure on the rest of the household budget," Krugell said.

"Part of the story may also be that following the Covid knock and then the period of high inflation and interest rates, people were postponing spending on vehicles, but now it is time to replace an old car and we see that in these positive sales numbers.”

Krugell added that this was good for the dealerships, but noted that local manufacturing was experiencing lots of competitive pressure from Chinese and Indian imports.

Earlier this month, the Automotive Business Council of South Africa (Naamsa) reported that aggregate new vehicle sales surged to 54 700 units in September 2025, the highest monthly total since September 2015.

This represents an increase of 10 700 units, or 24.3%, from 44 000 units sold in September 2024.

Naamsa attributed the strong performance to easing inflation, relatively stable monetary conditions, and an expanding range of imported models and brands.

“South Africa’s new vehicle sales performance in September 2025 continued to unfold strongly against a backdrop of easing inflation, firm but restrictive monetary policy, modest economic growth momentum and an ongoing expansion of imported models and brands.”

“The September 2025 new passenger car market at 38 603 units, its highest level since October 2014, registered an increase of 8 436 cars, or a gain of 28.0%, compared to the 30 167 new cars sold in September 2024.”

Sales in the medium truck category declined 1.9% to 767 units, while heavy trucks and buses rose 5.9% to 2 252 units.

Naamsa noted that the broader economy performed slightly better than expected in the second quarter, with GDP expanding by 0.8% quarter-on-quarter and household spending showing resilience.

However, the medium-term growth outlook remains muted. Fitch Ratings’ decision to affirm South Africa’s sovereign credit rating at BB- with a stable outlook reflects expectations of GDP growth averaging around 1.2% through 2027, as structural constraints continue to weigh on investment and job creation.

Despite these challenges, the steady rise in motor trade activity — supported by lower interest rates and improved consumer confidence — points to gradual recovery momentum in South Africa’s automotive sector.

BUSINESS REPORT