The value of the average vehicle asset finance (VAF) contract in South Africa was pegged at R249,420 in the fourth quarter of 2024, reflecting the outstanding amount that the average motorist still owes on their car.
As a result, the 2.17 million VAF accounts in the country collectively amount to a whopping R541.72 billion in vehicle debt.
These figures were revealed in credit agency TransUnion’s latest Consumer Credit Trends report published this April.
The R249,420 average VAF contract value is 1.9% higher than in Q3 2024, and 5.04% higher than in Q4 2023, which TransUnion attributes to rising vehicle prices.
It noted that new-car prices rose by 1.7% in Q4 last year due to supply chain constraints, while used-car prices declined 2.8%, making pre-owned vehicles more attractive.
“Used-vehicle financing outpaced new-vehicle financing at a ratio of 1.56:1 as consumers sought more cost-effective options,” added TransUnion.
Regardless, VAF agreements still grew 12.7% YoY, with mid-range financing (R250,000–R750,000) accounting for more than 65% of total financed vehicles.
“Vehicle finance showed signs of recovery after registering its second consecutive quarter of growth in Q4 2024,” said the company.
“The underlying pricing trends of vehicles explains the continued rise in average balances which grew at 5% in the last quarter of 2024.”
As the market continues to recover and spending pressures persist, TransUnion expects delinquencies to grow. Delinquencies are described as accounts where holders have missed one or more scheduled payments.
It noted that finance houses should be careful in doling out new debt going forward and carefully evaluate consumers’ capacities to borrow against existing debt obligations.
This is to ensure they can keep up with all their financial commitments.
“Financial education is also key to consumers understanding the importance of healthy credit profiles, helping them progress through their lifecycles and take on a vehicle loan, which is an important step in the graduation journey of young and new-to-credit consumers,” said TransUnion.
Alternative transport on the rise
TransUnion further said that alternative ownership models like leasing, subscriptions, and rent-to-buy agreements gained traction in Q4 2024, especially among younger buyers seeking flexible financing solutions.
These include services such as Avis iLease, Planet42, and Toyota’s Kinto One, which enable mobility without long-term financial commitments.
TransUnion previously also highlighted this phenomenon in its Vehicle Pricing Index report.
The shift to these ownership models was driven by a number of factors, including:
- Evolving digital-first consumer preferences
- Affordability constraints and rising vehicle prices
- Increased demand for short-term, commitment-free mobility solution
It labelled the change to alternative ownership methods as the start of a “dual evolution” for the South African automotive sector.
Car ownership remains a key aspiration in South Africa, however, these new trends indicate that affordability and flexibility will increasingly shape demand going forward, said the credit agency.
“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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