South Africans are increasingly walking away from traditional bank finance and opting for vehicle subscriptions and rent-to-buy services.
Credit agency TransUnion’s latest Vehicle Pricing Index report highlighted that car subscription services such as Avis iLease, Planet42, and Toyota’s Kinto One gained traction in 2024 among consumers seeking mobility without long-term financial commitments, as they allow them to essentially “own” and maintain a vehicle for a few years through a single monthly payment without the hassle of having to sell if afterwards.
They were also attractive for individuals with variable income streams or evolving credit profiles.
Likewise, rent-to-buy models became more popular particularly among consumers unable to access traditional credit.
These agreements, which bundle rental, insurance, warranties, and tracking fees, allow higher-risk borrowers to build up a repayment profile and ultimately acquire ownership of the vehicle over time.
The shift to these ownership models was driven by a number of factors, including:
- Affordability constraints and rising vehicle prices
- Evolving digital-first consumer preferences
- Increased demand for short-term, commitment-free mobility solution
“While traditional car ownership remained a key aspiration for many South Africans, alternative financing models offered new opportunities for access and affordability, particularly among younger and higher-risk borrowers,” said TransUnion.
“However, while these options offered convenience, their impact on traditional car buying patterns remained limited.”
Dual evolution
The move away from more traditional ownership methods reflects a generational shift in the market, with younger consumers increasingly gaining purchasing power.
“The transition from traditional bank leasing to alternative models, such as car subscriptions and rent-to-buy agreements, reflected a fundamental shift in vehicle financing in 2024,” said TransUnion.
“This trend was particularly evident among Gen Z and Millennials who increasingly sought more flexible and affordable mobility solutions.”
The adoption rates among the generations were categorised as follows:
TransUnion labels the phenomenon as the start of a “dual evolution” for the automotive sector.
While car ownership remains a key aspiration, affordability and flexibility will likely shape demand going forward.
“Economic pressures, rising vehicle prices and financing challenges could limit new car sales and drive interest in alternative ownership models,” said TransUnion.
“However, South Africa’s strong cultural preference for car ownership — reinforced by inadequate public transport — suggests a growing economy could fuel a surge in new vehicle sales, particularly if expected economic growth in 2025 and 2026 materialises.”
Despite this potential, persistent financial constraints and high vehicle costs may continue to act as barriers, preventing a full-scale market boom.
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