South African Passenger Vehicle Sales Rise Slightly To 114,517 Units In Q1 2026 As Market Turns More Selective

Passenger vehicle sales reached 114,517 units in Q1 2026, up slightly from 114,246 units in Q4 2025. Year-on-year growth moderated to 12.6%, reflecting steady but slowing momentum as households contend with higher living and financing costs.

Affordability pressures reshape buying behaviour

The report highlights a market that is still expanding, but becoming more selective.

Rising fuel costs, financing expenses, insurance premiums and servicing costs are now playing a larger role in purchase decisions, alongside sticker price.

“Vehicle demand has not collapsed, but the market is moving into a more selective phase,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “Consumers are still buying vehicles, but affordability is no longer only about the purchase price.”

Macroeconomic conditions also added pressure during the quarter. Inflation rose from 3.1% in March to 4.0% in April, while the Monetary Policy Committee increased the prime lending rate by 25 basis points in May. Higher fuel prices linked to geopolitical tensions have further tightened household budgets.

Residual values and long-term risk in focus

The report notes that affordability is increasingly being shaped by long-term financing structures, with many buyers extending loan terms beyond six years and using balloon payment options.

While this improves monthly affordability, it increases exposure to residual value risk. If vehicles underperform in resale markets, consumers may face negative equity or refinancing pressure at trade-in, making used car performance a growing factor in purchasing decisions.

Chinese brands accelerate market share gains

One of the most significant structural shifts in the market is the rapid rise of Chinese manufacturers.

Chinese brands grew sales by 75% year on year in Q1 2026, significantly outpacing the broader passenger and light commercial vehicle market growth of 12.7% and traditional OEM growth of 2%.

As a result, Chinese manufacturers now account for more than 19% of new passenger and light commercial vehicle sales in South Africa, meaning nearly one in five new vehicles sold locally originates from a Chinese brand.

Beyond price competitiveness, the report notes that these brands are increasingly competing on technology, fuel efficiency, features, warranty offerings and perceived long-term value.

The Chery Group, including Chery, Jetour, Omoda and Jaecoo, recorded combined sales of 16,094 units in Q1 2026, positioning it among the country’s largest automotive players.

“Chinese brands have moved beyond the role of price disruptors,” said Hatea. “They are becoming structural industry players, influencing dealer networks, financing ecosystems and ownership perceptions.”

Diverging trends in new and used markets

The gap between new and used vehicle markets continued to widen.

According to NaTIS data, new vehicle registrations increased by 11.6% year on year in Q1 2026, marking the sixth consecutive quarter of double-digit growth. Used vehicle registrations rose by 2.6%, indicating a slower recovery in the secondary market.

The used-to-new registration ratio declined to 2.3, its lowest level in the reporting period. While used vehicles still accounted for 69% of total registrations, the share of new vehicles increased to 31%, up from 23% in Q4 2025.

Price trends also favoured new vehicles, with new vehicle inflation recorded at 0.8%, while used vehicle prices remained in deflation at -1.3%.

Consumer confidence improves, but risks remain

Dealer sentiment strengthened during the quarter, with new vehicle dealer confidence rising to 67, its highest level in 13 years. However, the report warns that higher operating costs, fuel inflation and broader economic uncertainty could weigh on future performance.

Consumer intent also improved. TransUnion’s Consumer Pulse Survey found that the proportion of consumers planning to buy a vehicle in the next few months increased from 19% in Q4 2025 to 22% in Q1 2026. Intent was strongest among younger buyers, with 26% of Gen Z and 24% of Millennials indicating plans to purchase.

Hybrids gain momentum in powertrain shift

Powertrain preferences continue to evolve as affordability and infrastructure constraints shape choices.

Internal combustion engine vehicles remain dominant at 49% of consumer preference. However, hybrid electric vehicle interest rose sharply to 39%, up from 30% in the previous quarter, making hybrids the leading electrified option.

Interest in battery electric vehicles and plug-in hybrids also increased, each reaching 26%.

“Hybrids are emerging as a practical transition pathway for South African consumers,” said Hatea. “They offer fuel savings and lower running costs without full reliance on charging infrastructure.”

Outlook: value and affordability define next phase

While domestic demand remains supportive, the report notes that export performance is under pressure due to global trade uncertainty, geopolitical disruption and changing emissions requirements.

According to TransUnion, the next phase of South Africa’s vehicle market will be defined by affordability, access to finance and shifting consumer expectations, rather than volume-led growth alone.