73% of all new cars in South Africa cost over half a million rand

Cars in South Africa are quickly becoming unaffordable for the average salary, as more than 73% of all vehicles now cost more than half a million rand.

There are approximately 1,368 different models on sale in the country right now, including light commercial vehicles such as bakkies and vans but excluding medium and heavy commercial vehicles like trucks and buses.

Of this sum, 999 units cost more than R500,000, which equates to just shy of three-quarters of all the cars on the market.

Plenty of options for an elite few

Car prices have shot up in South Africa over the last few years for several reasons, from supply issues to changing consumer expectations.

The Covid-19 pandemic effectively shut down car manufacturers at the start of the decade, leading to a massive drop in supply.

The subsequent lockdowns meant that the demand for cars also decreased, which prompted automakers to raise prices to stay afloat during this difficult period.

However, demand quickly bounced back to pre-pandemic levels once the Covid restrictions were eased, but carmakers could no longer keep up as they had shut down production lines and laid off staff, creating an imbalance in the market that drove up prices.

The resulting price hikes can still be felt to this day, as it is not as if carmakers slashed prices once production eventually returned to pre-pandemic levels.

This is not the only contributor, however, as South Africa’s economic policies also play a role in the substantial window stickers we see in showrooms.

Notably, the fluctuating value of the rand and high import duties have made it prohibitively expensive for companies to bring in certain models.

Renault, for example, explained that it could not import the Oroch bakkie because the rand’s worsening condition meant it would not be able to sell it at a competitive rate.

South Africa’s import duties, meanwhile, tax incoming cars at a rate of between 18% and 25% depending on their place of origin, significantly adding to the final ask.

A good example of this is the Ford Puma crossover which, due to the costs involved with importing it, costs a minimum of R573,500 despite being based on the Fiesta hatchback.

Another factor is that is sometimes overlooked is all of the tech that new cars are packaged with.

Features like 360-degree camera systems, lane-keep assist, automatic climate control, and large infotainment screens are all very nice to have, but these are all costly additions that cars from previous generations simply didn’t have.

It must also be said that the average cost of cars tends to be skewed towards the more expensive end to begin with, as luxury models tend to have far more variants than affordable ones.

The entry-level Toyota Vitz, for example, only has three derivatives, while Land Rover is more than happy to produce 28 different takes on the Defender to suit its clients’ needs.

While there are many reasons why cars are so expensive these days, the end result is the same for consumers.

The average formal sector salary in South Africa is just R26,800 per month, or R321,600 per year before tax.

Financial institutions recommend that individuals do not spend more than 20% of their gross monthly salary on vehicle payments, which means the average consumer should only spend up to R5,360 per month on a new car.

This means they motorist can only afford a vehicle with a sticker of R250,000, of which there are only a handful of models left in the entire country.