South Africa's economic recovery lost some momentum during the second quarter of 2026, while higher fuel and transport costs increased pressure on household affordability.
According to TransUnion's Q2 2026 Mobility Report, GDP growth slowed to 0.9% year on year in Q2, compared with 1.9% in Q1. The economy contracted by 0.2% quarter on quarter after six consecutive quarters of expansion.
The weakness was concentrated in mining, manufacturing and trade, while investment remained subdued.
TransUnion expects growth to recover during the third quarter and strengthen further in the fourth quarter. It says this should support an improvement in full-year growth compared with the 1.1% recorded in 2025.
However, the report expects the recovery to remain modest. Energy and logistics reforms are gradually improving the operating environment, but weak investment, infrastructure constraints and limited fiscal space continue to restrict the economy's growth potential.
For motorists and vehicle buyers, inflation and fuel prices are important parts of the picture.
Headline inflation accelerated to 4.5% in Q2, its highest level in two years. TransUnion attributes the increase primarily to fuel and transport costs, marking a deterioration from the low inflation environment earlier in the year.
The report says higher living costs combined with subdued income growth are likely to place increasing pressure on household purchasing power.
There is also greater uncertainty around interest rates. The South African Reserve Bank held the policy rate at 7.0% in July, while indicating that inflation was expected to remain above 4% until early 2027.
TransUnion says higher fuel prices, renewed inflationary pressures and less favourable financing conditions are therefore likely to weigh on discretionary spending and vehicle affordability during the remainder of 2026.
Despite these pressures, vehicle demand remained resilient during the second quarter.
The report says strong durable goods consumption and continued growth in new vehicle sales indicate that consumers had not materially withdrawn from the vehicle market.
New passenger vehicle sales reached 109401 units during Q2, down from 114517 in Q1, but still 15.8% higher than the same quarter a year earlier. TransUnion describes the quarterly decline as a moderation from an exceptionally strong Q1 rather than a broad deterioration in demand.
The changing affordability environment is also reflected in the relationship between new and used vehicles.
The used-to-new registration ratio increased from 2.3 in Q1 to 2.7 in Q2, indicating that used vehicles took a larger share of registrations during the quarter. However, new vehicles continued to gain share compared with a year earlier.
TransUnion says consumers are becoming more deliberate in their purchasing decisions, with greater attention being paid to fuel efficiency, financing costs, vehicle utility and total cost of ownership.
The report says demand is therefore continuing in an increasingly challenging affordability environment rather than disappearing altogether.
As South Africans celebrate their rich heritage, it is also worth reflecting on a lesser-known chapter of the country's history: its long connection with electric vehicles (EVs).
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