So says the Automotive Business Councill | naamsa in its reaction to yet another good month for new -ehicles sales in South Africa.

Fuel prices fell sharply in November 2025, petrol by 51 cents a litre, diesel by up to 21 cents and LPG by 70 cents per kilogramme, owing to softer international oil prices and a firmer currency. Although the immediate effect on November sales is naturally lagged, the benefits for transport-intensive sectors and household operating costs are material. These reductions reinforce forward-looking confidence and lower the total cost of ownership for vehicle buyers.

Labour market data showed an improvement, with unemployment declining to 31.9% in Q3 2025 from 33.2%. While this recovery remains fragile and does not directly translate into immediate sales acceleration, it signals stabilisation in broader economic conditions, an important psychological anchor for durable-goods demand over the medium term.

The 2025 Medium-Term Budget Policy Statement reinforced South Africa’s fiscal credibility by maintaining the primary surplus trajectory, endorsing the newly formalised 3% inflation target and sustaining firm expenditure discipline.

This was followed by S&P Global’s sovereign credit rating upgrade, which lifted the foreign-currency rating to BB and the local-currency rating to BB+, the first upgrade in almost two decades. The decision reflects advances in fiscal consolidation, improved revenue performance and notable gains at state-owned enterprises, particularly Eskom’s return to profitability.

The upgrade strengthens South Africa’s macro-economic positioning and improves the country’s funding outlook, which will, over time, support better credit terms for consumers and businesses, including those financing new-vehicle purchases.

Inflation trends remained favourable. Headline CPI rose slightly to 3.6% y/y in October, driven by base effects in fuel prices, while core inflation eased to 3.1%, supported by declining durable goods prices and continued disinflation of imported goods. Food inflation moderated to 3.9% on the back of lower vegetable prices and a strong maize harvest. The inflation profile for 2025 is expected to average 3.3%, firmly within the SARB’s target and reinforcing a low-inflation environment.

This backdrop enabled the South African Reserve Bank to deliver a 25bp rate cut, reducing the repo rate to 6.75% at its first MPC meeting under the formal 3% inflation target. Although the Bank retained a cautious forward-guidance tone, the shift marks a gradual departure from the restrictive policy stance that has characterised recent years, supporting affordability and improving sentiment heading into 2026.

Re-emergent geopolitical tensions between South Africa and the US administration following the G20 Summit, where the US announced that South Africa would not be invited to the 2026 gathering, alongside a Senate bill proposing a two-year AGOA extension that will explicitly exclude South Africa, remain a source of potential volatility. Given the automotive industry’s significant export exposure, naamsa continues to monitor these developments closely.

Photo: Erik Mclean - Unsplash