Two months into the year, South Africa’s new car sector continued to gain off the back of a very strong 2025, only for war in the Middle East to potentially derail its growth.
The Automotive Business Council (Naamsa) reported that last month was the best February for new car sales since 2013, with sales increasing by 11,4% year-on-year from the same month last year to reach 53,455 units sold.
Despite export volumes decreasing, February still represented a strong month for local sales figures.
Naamsa maintains a positive outlook, noting that the local environment remains supportive, especially with headline consumer inflation easing to 3.5% year on year, and inflation at 3.4%.
Producer price inflation for manufactured goods slowed to 2.2%, suggesting easing factory cost pressures despite the high input cost of electricity and intermediate goods.
All of these factors have moderated vehicle price inflation, supporting real household purchasing power.
Naamsa noted that the latest Budget Speech reinforces fiscal credibility through a consistent, albeit cautious, consolidation path, with gross debt projected to stabilise.
“While the February new vehicle sales performance remains encouraging, it unfolds against a shifting global energy backdrop and confirmed domestic cost adjustments that warrant careful monitoring,” it added.
While the global energy sector remains uncertain, local pressures are also in the spotlight for how they may affect transport costs and buyer confidence.
According to WesBank’s head of marketing and communication, Lebogang Gaoaketse, consumers are monitoring their monthly spend closely.
He added that the increased fuel levies, expected to be implemented from next month, coupled with oil prices and currency volatility, are likely to increase the cost of vehicle ownership in the coming months.
Looking ahead, the new vehicle market is cautiously optimistic thanks to easing inflation and expectations of further interest rate cuts, but rising fuel costs and policy uncertainty will have buyers on alert.
Consumer uncertainty
Despite recent optimism, increased fuel prices do have an effect on buyer confidence, as lower fuel prices and easing inflation tend to have a direct effect on new car sales.
Commenting on a strong February, the chairperson of the National Automobile Dealers’ Association (NADA), Brandon Cohen, commented that the world is entering a period of uncertainty brought on by the war in the Middle East.
“The regional unrest, which is reverberating globally, will be another factor to cause hardship, particularly in terms of higher transport and logistics costs and supply chain management,” he said.
Cohen noted that oil is a cardinal player in times of crisis, and will affect many aspects of life by pushing up both manufacturing and transport costs.
Higher fuel prices have further-reaching effects than just the cost of filling up at the pump, affecting transport and logistics costs, and filtering through the entire value chain.
This contributes to higher prices across all goods and services, and places further strain on consumer budgets.
“Sustained fuel increases place greater scrutiny on the total cost of vehicle ownership and are also likely to reinforce a cautious approach to inflation management by the South African Reserve Bank, which in turn affects purchasing behaviour,” noted NADA.
It added that rising fuel and levy costs add further pressure on the automotive retail sector, affecting overall vehicle expenses at a time when household finances remain tight.
“Continued volatility in global oil markets, in response to rapidly escalating developments in the Middle East, also introduces uncertainty for both consumers and businesses,” it said.
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