SA automotive industry records strong Q1 rebound

The recovery of the SA automotive sector is driven by improved consumer sentiment, lower interest rates and access to retirement savings through two-pot withdrawals, according to the latest TransUnion SA Mobility Insights Report for Q1 2025.

Rising real wages, too, have contributed to an upward trajectory averaging about 34,000 monthly passenger vehicle sales in the first quarter of the year, and representing the highest levels seen since Q3 2015.

Affordability, longer ownership cycles and the growing availability of low-cost models remains the driver of purchase decisions, particularly younger and first-time buyers.

“SA consumers are returning to the vehicle market with a clear focus on value and flexibility,” says Lee Naik, CEO of TransUnion Africa. “We’re seeing a continued shift away from traditional premium segments in favour of more accessible alternatives that meet evolving needs and budgets.”

Social media

Gen Z’s rising influence, responsible for a 27.9% year-on-year increase in vehicle finance volumes, highlights social media’s importance to automotive brands aiming to attract younger buyers said to spend more than 3.5 hours daily on platforms including TikTok, Instagram and YouTube.

According to TransUnion, 76% of SA social media users now turn to social media for product research, pushing automotive brands towards digital-first strategies with influencer campaigns, short-form videos, platform-specific strategies, AI-enabled targeting, and immersive tools like augmented reality and virtual reality. 

The Q1 2025 report also introduces new data on insurance-linked vehicle asset finance (VAF). As of early 2025, only 39% of insured vehicle owners had financed vehicles, down from 44% in 2020.

This signals a rise in alternative financing or lapses in insurance post-purchase, and TransUnion’s 2024 Insurance Survey found that 25% of vehicle users had driven uninsured in the past six months.

This trend has implications for lenders who face greater asset risk in the event of write-offs without insurance recovery, and for insurers, whose portfolios may now carry increased exposure. To mitigate these risks, strategies such as bundled insurance, usage-based coverage and low-cost flexible insurance models are growing in relevance.

Used vehicles

While used vehicles have dominated financing trends in recent years, Q1 2025 marked a notable shift back towards new vehicle purchases, driven by easing interest rates, improved entry-level model availability, and aggressive manufacturer incentives.

The influx of competitively priced Chinese models has attracted budget-conscious buyers away from the used market, fuelling fresh growth in new vehicle registrations.

SA economy

The broader economic outlook for SA in 2025 remains cautiously optimistic, with GDP (GDP) expected to grow by 1.4%.

Industrial output remains under pressure, but retail and vehicle sales continue to show resilience. Vehicle export activity rose modestly by 0.4% year-over-year in Q1 2025, signalling a gradual recovery.

“The SA automotive sector is adapting to new consumer behaviours and market forces. The insurance gap, affordability options, credit access and rising Gen Z participation will shape the road ahead. Collaboration across industry players is vital for long-term growth,” says Naik. 

“The strong recovery in new vehicle sales is a positive sign, but sustaining this growth will require policy certainty, infrastructure investment, and structural reforms. Without these, the economy remains vulnerable.”