New vehicle sales in South Africa continue to grow at a double-digit pace, with 61,645 units sold in September, a 12.7% increase from the same period last year. However, industry leaders are sounding the alarm on the sector's dire straits. Bobby Ramagwede, CEO of the Automobile Association of South Africa, expressed concerns about the lack of central planning and the impact on the local steel industry.
The local car sector is struggling, and Ramagwede believes it cannot be expected to save the beleaguered South African steel industry. He noted that the country is not in a position to bring in rolls of steel any cheaper than anywhere else in the world, excluding ArcelorMittal. The Automobile Association and other industry leaders are urging for a re-evaluation of the country's approach to steel production and importation.
The Automotive Business Council (Naamsa) reported that 305,899 new passenger vehicle sales were recorded in the year to August, up 13.5% from the same period last year. However, Ramagwede warned that the sales figures mask a concerning trend: consumers are opting for entry-level vehicles, indicating income strain. This shift towards cheaper models is a result of consumers prioritizing affordability and value.
According to Naamsa's figures, 422,459 passenger vehicles were sold in 2025, higher than the 351,553 sold in 2024 and the 347,367 in 2023. However, industry leaders are concerned about the long-term implications of the current trends. The local steel industry, a crucial supplier to the automotive sector, is in distress, with steel production dropping 18% since 2018.
The South African Iron and Steel Institute's general secretary, Charles Dednam, recently told parliament that the local steel industry remained in distress. The department of trade, industry and competition has temporarily allowed importation to support inputs into the car sector. However, Ramagwede argued that allowing the steel industry to fall flat would have downstream implications for other industries, including construction.
A report by TransUnion's Industry Insights found that South Africa's consumer credit market remained resilient, but growth was becoming increasingly selective and dependent on affordability. Vehicle buyers are prioritizing financing costs, fuel efficiency, and total cost of ownership, while lenders are focusing on managing exposure and credit limits. The market is becoming more value-conscious, with consumers seeking credit and mobility solutions.
The Mobility Insights Report showed that passenger vehicle sales increased 15.8% year on year during the second quarter, with Chinese manufacturers gaining market share through competitively priced vehicles. Hybrid vehicles are emerging as an attractive alternative for consumers focused on fuel efficiency and operating costs. As the industry continues to evolve, leaders are calling for a re-evaluation of the country's approach to steel production and importation.
Key points
- South African car sales grew 12.7% in September, but industry leaders warn of alarming trends as consumers opt for cheaper models.
- The local steel industry, a crucial supplier to the automotive sector, is in distress, with steel production dropping 18% since 2018.
- Consumers are prioritizing affordability and value, with a growing interest in hybrid vehicles and competitively priced models.
