Cheaper models of electric vehicles (EVs) are driving car sales in South Africa. This is according to the TransUnion South Africa Vehicle Pricing Index (VPI) for the fourth quarter of 2024.
It reveals a cautiously optimistic outlook for the country’s automotive sector, with improving economic conditions encouraging consumer confidence, while affordability challenges continue to shape purchasing decisions.
The report highlights the rising potential of EVs in South Africa, signalling a significant shift in consumer interest and market dynamics.
The country reached a milestone of over 1 000 battery electric vehicle sales in 2024, which TransUnion says is a small but significant step in a market still dominated by petrol and diesel vehicles.
It notes that while EVs represent a fraction of total sales, the 60% year-over-year growth in hybrid and plug-in hybrid sales signals a gradual shift in consumer interest toward more sustainable options.
TransUnion notes the introduction of more affordable EV models priced under R1 million − such as the BYD Dolphin and Seal − is expected to accelerate adoption in 2025, making EV ownership more accessible to a broader segment of the market.
However, it adds, affordability remains a key barrier, with high upfront costs and concerns around charging infrastructure limiting mainstream adoption.
“EV adoption in South Africa is gaining momentum, but for this growth to be sustained, industry players must collaborate to make ownership more accessible,” says Marcia Mayaba, sales vice-president, auto information services at TransUnion South Africa.
“With the right financial products, infrastructure expansion and increased consumer awareness, EVs have the potential to reshape South Africa’s automotive landscape in the years to come.”
The report also reveals evolving vehicle financing, with leasing, subscriptions and rent-to-buy agreements gaining traction, as consumers seek more flexible and cost-effective solutions.
For the first time, it adds, the Q4 2024 VPI report explores the impact of e-hailing, leasing and car subscriptions on the South African auto market.
While outright vehicle ownership remains dominant, it says, alternative mobility solutions are becoming increasingly relevant.
The report indicates that leasing and subscription-based models are particularly appealing to Millennials and Gen Z consumers, who prioritise affordability and flexibility over long-term ownership commitments.
Additionally, TransUnion says, e-hailing continues to serve as a supplementary transport solution rather than a direct competitor to vehicle ownership.
According to recent data from inDrive, an international ride-hailing service, 21.1% of South Africans make use of e-hailing services, reflecting the growing popularity of these transportation alternatives.
However, TransUnion says the majority of users still aspire to own a vehicle in the long-term. To address affordability constraints and credit access challenges, leasing and rent-to-buy options are emerging as viable alternatives, offering consumers flexible solutions that align with their financial situations.
While lower-value finance agreements (under R250 000) declined, a growing share of financed vehicles now fall within the R250 000 to R750 000 range, it adds.
According to TransUnion, this shift suggests that while affordability remains a concern, consumers are prioritising flexible financing solutions and adjusting their purchasing behaviour to align with available credit and economic conditions.
“The traditional model of vehicle ownership is evolving,” adds Mayaba. “While outright ownership remains a key aspiration, younger generations are increasingly exploring flexible mobility solutions that align with their financial realities and lifestyle preferences.”
As South Africa’s automotive sector continues to evolve, the interplay between affordability, alternative financing models and emerging technologies like EVs will shape its future, says TransUnion.
It points out that while used vehicles remain the preferred choice for many consumers, the growth in digital financing and the introduction of more accessible EV models signal an industry on the brink of transformation.
“Collaboration among industry players, financial institutions and policymakers will be key to ensuring sustainable growth and greater accessibility for all consumers. With the right innovations and strategies, the sector is well-positioned to adapt to changing market dynamics and drive long-term success.”
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