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South African Automotive Market: Recovery Gains Traction but Headwinds Persist
- New passenger sales rose 22.5% year-on-year, the strongest volumes since 2014
- Chinese automakers expanded their market share to nearly 15%, up from just 3.1% in 2022
- Passenger-vehicle exports contracted sharply, down 24.6% amid weaker global demand and new US tariffs
TransUnion’s latest Mobility Insights Report shows South Africa’s automotive market building momentum in 2025, supported by a favourable interest rate environment, record-low new-vehicle inflation, and liquidity from the two-pot pension reform. While recovery is underway, the outlook remains fragile, with affordability constraints and export headwinds threatening longer-term growth.
Supportive Shifts, But Growth Remains Fragile
The South African Reserve Bank has cut interest rates five times since September 2024 and inflation has returned to the lower end of the 3-6% band1, providing households with some relief. Consumer confidence has improved among middle- and higher-income groups, although low-income consumers continue to face pressure from food and electricity costs2.
“These macro shifts provide short-term support to the vehicle market, but momentum is likely to taper in 2026 without further reforms,” said Lee Naik, CEO of TransUnion Africa.
Affordability And Value Drive a Surge
Passenger car sales broke through the 35,000-unit ceiling for the first time in years, with July and August 2025 marking the strongest volumes since 2014. According to Naamsa, new passenger car sales grew 22.5% year-over-year (YoY) in Q2, fuelled by lower borrowing costs, aggressive OEM incentives and the entry of new value-focused brands.
Chinese automakers continued their rapid growth, expanding market share from 3.1% in 2022 to nearly 15% in Q2 2025. Their affordable, tech-rich SUVs and expanding dealer networks are reshaping competition, forcing legacy OEMs to rethink pricing, features, and model cycles. Toyota retained overall leadership, with Suzuki securing second place for the second consecutive quarter.
“Improved affordability, aggressive incentives and growing demand for value brands, alongside modest support from two-pot withdrawals, helped sustain momentum through 2025. However, as interest rates remain elevated and credit conditions tighten, and the two-pot effect normalises, growth is expected to moderate in 2026, with export risks and rand volatility adding uncertainty,” said Naik.
Diverging Trends: New vs. Used Vehicle Demand
NaTIS data shows new registrations rising 20% YoY in Q2 2025, led by Northern Cape, Free State and Northwest. In contrast, used registrations declined by 1.4%, reflecting pressure in that segment.
Across all vehicle sales, the Used-to-New Vehicle Registration Ratio rose to 3.2 in Q2, up from 2.5 in Q1, indicating a quarter-on-quarter increase in the relative share of used vehicle registrations. However, this remains below the 3.8 ratio seen through much of 2024, suggesting that new vehicles have regained some ground YoY. While used vehicles continue to dominate overall registrations, the market has shifted slightly back toward new vehicles compared to last year. This nuanced divergence presents opportunities for OEMs and dealer networks, while independent used dealers continue to face headwinds.
Exports Slump Amid Global Shocks
While domestic momentum improves, passenger vehicle exports fell 24.6% in Q2 2025 due to softer global demand and new US tariffs of up to 30%. Premium models, heavily reliant on the US and European markets, are under pressure, raising concerns for production, jobs, and investment.
Two-pot Withdrawals: Targeted Liquidity with Visible Impact
The September 2024 two-pot retirement reform injected liquidity into households, with evidence from the Bureau of Market Research suggesting a direct impact on mobility demand3, particularly in the used car market. While withdrawals were generally insufficient to fund deposits for new vehicles, they provided meaningful support to affordability-driven used vehicle purchases.
The reform is offering short-term relief rather than long-term wealth extraction, with withdrawals largely used for deposits, consumption, or debt repayment. Generational differences are evident: Millennials (aged 29 to 44) and younger Gen X (aged 18 to 28) are the most active claimants, while Baby Boomers withdraw minimally. Repeat withdrawals are becoming more common, suggesting both ongoing financial strain and the emergence of a recurring source of liquidity for entry-level and mid-market segments4.
“Two-pot withdrawals were not the only factor lifting sales,” noted Naik. “But the timing, scale and claimant profile suggest they acted as a meaningful catalyst for incremental used-car purchases.”
What Industry Players Should Do Next
Looking ahead, TransUnion advises that OEMs, dealers and lenders recalibrate strategies to balance domestic opportunities with external risks. Industry participants should align campaigns with liquidity cycles, planning promotions and stock availability around expected two-pot withdrawal windows.
Affordability must remain the priority, with a sharpened focus on value brands, certified pre-owned vehicles, and models that deliver a strong total cost of ownership. Financing solutions should also evolve, offering deposit support, trade-in boosters, and more flexible terms, while carefully monitoring repayment behaviour to manage post-purchase risk.
At the same time, leveraging data-driven insights, integrating credit and registration analytics to identify liquidity-sensitive buyers, preapprove customers, and track repayment performance, will be critical for sustaining growth in an uncertain environment.
“South Africa’s auto market is regaining momentum, but it’s a fragile recovery,” said Naik. “Those who time offers to policy-driven liquidity, sharpen affordability, and manage risk proactively will be best placed to capture growth.”
Read the full TransUnion South Africa Mobility Insights Report here.
ENDS
Notes to Editors: The Q2 2025 release is the second edition of the TransUnion South Africa Mobility Insights Report, formerly known as the Vehicle Pricing Index. The rebranded report now captures broader consumer, financing, and insurance insights across the mobility ecosystem.
Sources:
1 South African Reserve Bank (SARB)
2 TransUnion-South-Africa-CCI-Report-H2-2025-V9.pdf
3 Two-pot-claims-and-credit-data-FINAL.pdf
4 FAnews: Majority of two-pot withdrawals in the new tax year are repeat withdrawals; Moneyweb: Two-pot withdrawal: repeat claims surge; and Moneyweb, Two-pot payouts surge to R57B, with 4m withdrawals to date.
South Africa’s Credit Market Expanded During Q2 2025 Amid Eased Interest Rates and Shifting Consumer Risk
- Millennial consumers drove significant new credit card growth, although new card limits dropped significantly
- Vehicle asset finance growth trend continued, with more than two thirds of loans originated by Gen Z and Millennial consumers
- Eased interest rates drove year-over-year growth in home loan originations, although affordability pressures may be impacting performance
South Africans responded to a more favourable interest rate environment during Q2 2025, leading to increased new account originations across most consumer credit products, particularly for credit cards and vehicle finance. Home loan activity also showed signs of recovery, as consumers felt more confident in committing to longer-term credit obligations. Retail revolving loans were the exception, with origination volumes declining despite growth in balances.
These are some of the findings of TransUnion’s Q2 2025 South Africa Industry Insights Report, which also found that South Africans were managing their credit better, as delinquencies improved across most consumer credit products during the quarter.
Credit Card Market Continued Upward Trajectory
Credit card originations increased by a robust 36.5% year-over-year (YoY), underscoring this product’s relevance as a flexible financial tool for consumers seeking convenience and/or liquidity in what remains a challenging economic environment. Millennials (born 1980 to 1994) drove this growth, with originations in this cohort making up 47.6% of all originations in the period.
Lenders seeking to expand market share continued to extend credit to consumers in higher-risk prime and below risk tiers[1], with originations to subprime consumers increased by 49.2% YoY. They balanced this growth among higher-risk borrowers with smaller credit limits. The average credit limit on new credit cards decreased by 19.5% YoY during the quarter.
Delinquency trends showed mixed results. Credit card balance-level delinquency rose slightly to 18.1%, up 13 basis points (bps) YoY, indicating a marginal increase in overdue balances. In contrast, account-level delinquency rates declined by 32 bps YoY to 12.1%. This decline in account-level delinquency suggests that while some consumers accumulated larger balances, many were able to make payments to keep their accounts active.
“The latest credit cards trends reflect strategic credit use and disciplined repayment behaviour among a financially stretched borrower base,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “The combination of rising origination volumes and shrinking new credit lines suggests that lenders are working to balance growth with prudent risk management. Lenders may need to refine their segmentation strategies, enhance early warning systems, and tailor credit line management to sustain portfolio health while supporting customers’ financial needs.”
Vehicle Asset Finance Shows Continued Growth
Vehicle asset finance originations increased by 21.0% YoY in Q2 2025, and average new loan amounts increased by 3.5% while the number of active accounts increased by 2.1% YoY. Growth was mainly driven by Gen Z (aged 18 to 28) and Millennial (aged 29 to 44) consumers who accounted for 64.3% of originations.
Outstanding balances grew by 7.6% YoY, and average balances have increased by more than 30% over the last five years, reflecting both higher vehicle prices and a sustained trend toward longer loan terms, which slows loan balance paydown rates. Loan terms granted during Q2 2025 averaged 74 months, up from 73 months in Q2 2024 and 72 months in Q2 2023. Longer loan terms, while slowing balance paydown, result in lower monthly payment amounts, which help consumers manage monthly cash flow in a high-cost environment.
Younger consumers are beginning to look for more ways to enter the vehicle market, including taking advantage of more cost-effective imported vehicles. However, 65% of vehicle finance originations were made by repeat buyers during Q2 2025, suggesting that access to vehicle finance remains limited for new entrants. At the same time, lenders need to be mindful of rising risk levels: in the second quarter of 2025, 44% of new-to-vehicle finance consumers fell into the subprime risk tier. These trends highlight the need for lenders to design credit products that support younger buyers, while ensuring responsible credit practices are upheld.
Account-level delinquencies for vehicle asset finance improved by 24 bps YoY to 5.1%, demonstrating that repayment behaviour for this product remained relatively stable, and that the overall risk profile of this portfolio is improving.
“For vehicle finance lenders, the rise in originations alongside modest growth in loan amounts suggests an opportunity to support demand while maintaining portfolio discipline,” said Hatea. “The improvement in delinquency rates is encouraging, but ongoing monitoring will be essential as economic recovery remains uneven. Vehicle finance lenders may benefit from refining pricing models, reassessing vehicle segmentation strategies, and balancing growth with prudent risk management.”
Home Loan Market Responds Positively to Eased Interest Rates
Lower interest rates, moderating inflation and improved real wage growth led to stronger consumer sentiment, giving lenders an opportunity to re-engage with consumers seeking home loans. New home loan account originations increased by 6.8% YoY during Q2 2025, showing early signs of recovery after declines in growth over previous quarters.
Favourable interest rate conditions and enhanced credit access drove broader access to home ownership this quarter, with 51% of home loans granted to individuals taking a home loan for the first time — the highest proportion in over five years. Among these, 56% were Millennials and 24% were Gen Z.
Delinquency trends showed mild deterioration, with the account-level delinquency rate increased by 29 bps to 7.5%. These movements suggest that while the market is stabilising, repayment stress remains a concern.
“These trends indicate a home loan market that is stabilising, but not without risk,” said Hatea. “For home loan lenders, the uptick in originations presents an opportunity to re-engage with the market, but rising delinquency rates underscore the need for vigilance. Portfolio strategies may need to shift toward enhanced consumer profile assessments, proactive risk monitoring, and targeted engagement with borrowers showing early signs of strain. As the market navigates this transitional phase, balancing growth with resilience will be key.”
Table 1: Key South African Credit Market Metrics (Q2 2025 vs Q2 2024)
|
Product |
YoY origination growth |
Serious account-level delinquency rate* |
YoY basis points (bps) change in delinquency rate |
| Credit card |
36.5% |
12.1% |
-32 bps |
| Bank personal loan |
2.2% |
25.9% |
-72 bps |
| Non-bank personal loan |
18.8% |
41.3% |
256 bps |
| Clothing accounts |
6.5% |
25.9% |
-265 bps |
| Retail instalment |
21.4% |
25.5% |
-238 bps |
| Retail revolving |
-6.3% |
14.9% |
-251 bps |
| Home loans |
6.8% |
7.5% |
29 bps |
| Vehicle finance |
21.0% |
5.1% |
-24 bps |
*Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears
[1] Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999).
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Nearly 7 in 10 South Africans Remain Optimistic About Finances Amid Rising Costs and Fraud Risks
- 68% of South Africans are optimistic about their household finances in the next 12 months, despite persistent inflationary pressures
- 75% expect their household income to increase over the next year, but 36% expect to be unable to meet their bill and loan payments in full
- Younger generations show the strongest engagement with credit, with Gen Z and Millennials most likely to use buy now, pay later (BNPL) services.59% of consumers said they were targeted by fraud recently, with money/gift card scams the most reported scheme
South Africans are managing cost-of-living challenges with a blend of resilience and caution, according to TransUnion’s Q3 2025 Consumer Pulse Study*. The findings reveal that while inflation and affordability remain top concerns, many consumers are maintaining financial optimism while adopting protective behaviours, especially in credit usage and cyber security.
“South Africans are signalling confidence, but it’s a confidence shaped by awareness of risk,” said Ayesha Hatea, director of research and consulting at TransUnion. “Consumers are balancing optimism with caution, adjusting spending habits, making informed credit decisions, and staying vigilant to fraud.”
Financial Confidence, but Rising Costs
Nearly seven in 10 (68%) of South Africans are optimistic about their household finances over the next year, while 75% expect their income to increase during that period. However, this optimism exists alongside strain: 36% of consumers say they expect to be unable to pay at least one of their current bills or loans in full. South Africans were concerned about the impacts of price increases, most particularly for groceries (82%), utilities (60%), fuel for cars (52%) and medical care (52%).
Younger Generations Shape Credit Behaviour
Generational differences continue to define financial habits. Nearly half of Gen Z (18-28 years old, 48%) and Millennials (29-44 years old, 43%) reported they’ll apply for new credit or refinance existing credit in the next year, compared to far lower intent among Gen X (45-60 years old) and Baby Boomers (61-79 years old).
Younger consumers are also driving the adoption of buy now, pay later (BNPL) services with 55% and 59% of Gen Z and Millennials saying they’ve used BNPL in the last 12 months compared to 39% and 19% of Gen X and Baby Boomers, respectively. Overall, 15% of South Africans who have used BNPL in the last year said they did so to afford a larger purchase (furniture, appliances or cars), highlighting both its appeal and potential risks in a high-inflation environment.
Cautious Credit Intent Amid Affordability Pressures
While the vast majority of South Africans (93%) say that access to credit and lending products is important to be able to achieve their financial goals, many remain hesitant to take on new financial products. In fact, 38% said they’ll apply for new credit or refinance existing credit in the next year. Credit awareness among South African consumers remains strong, with 70% agreeing that access to credit can unlock new opportunities and improve quality of life.
This sentiment aligns closely with TransUnion’s financial inclusion priorities, particularly as alternative data becomes a more prominent tool in assessing creditworthiness. The study reveals that consumers are increasingly aware of how credit affects their daily lives, which highlights the importance of expanding access to credit through inclusive data strategies, especially for those traditionally excluded from formal financial systems.
Among those planning to apply for new or refinance existing credit in the next year, unsecured credit products such as personal loans (30%), new credit cards (29%) and BNPL services (22%) are the most popular credit types they said they’ll apply for. In contrast, a lower percentage said they’ll apply for secured credit options like a new car loan or lease (18%) or home loans (16%), highlighting a cautious approach to larger, long-term borrowing.
Nearly Two-Thirds Report Being Targeted with Fraud
Fraud attempts and scams remained high in Q3: 59% of South Africans said they were targeted by email, online, phone call or text messaging fraud in the last three months, the same percentage as Q2. Among those who said they were targeted, the most reported scheme was money/gift card scams (37%), with phishing (28%) and smishing (28%) also widespread.
With the persistence of attacks, consumers are proactively taking action. In fact, 54% of all surveyed said they changed passwords, 35% checked their credit report for any signs of fraudulent activity against their profile, and 27% modified their login to secure login without passwords options or added multi-factor authentication in the last 60 days in response to cyber security concerns.
“Fraudsters are evolving, and consumers are trying to keep pace,” said Hatea. “This is why education and accessible protection tools are so critical in building long-term trust in digital engagement.”
Consumers can get their free annual credit report from TransUnion here.
* TransUnion’s online survey of 966 South African adults was conducted June 17– 31, 2025.
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