Amid growing pressure on the industry resulting from the 30% tariffs from the United States, increased market penetration by new Chinese and existing Japanese brands and the promise of new assembly lines – the sector is navigating a period of transition and transformation. What is becoming increasingly clear is that demand, affordability and timing are shaping consumer behaviour, and cross-sector collaboration is becoming central to long-term competitiveness, according to Absa.

Demand meets affordability:

The contours of demand reveal much about the opportunities and pressures facing the industry. Vehicle finance applications have grown by 65% over the past decade, a testament to the strength of underlying demand. Yet this growth has come against the backdrop of tightening affordability. Whereas monthly instalments once absorbed 14.3% of household income, they now consume 16.1%, reflecting the reality of consumers stretching further to access vehicles whose prices continue to outpace income growth.

Recent figures point to a divergence between sales and financing: while naamsa reported year-on-year growth of 21% in the second quarter, data from finance contracts (TransUnion) registered a 16% increase. The distinction lies in the mix of new and used vehicles. Finance contracts for new vehicles surged by 24%, exceeding naamsa’s measure, while those for used vehicles grew by 11%. This indicates a shifting balance in the market, where used cars remain dominant, but new models are beginning to gain ground, particularly among younger, aspirational buyers.

These trends are layered with shifting brand dynamics. German manufacturers continue to hold prestige, yet Chinese and Korean brands are making rapid inroads, particularly among women and buyers in the 35 to 45 age group. What Absa’s research confirms is that time is a decisive factor. A study of 70 000 customers revealed that most vehicle finance applications occur within 30 days of initial interest, emphasising just how critical timing has become in converting intention into purchase.

Shifting gears to NEVs:

Beyond consumer behaviour, the long-term competitiveness of the industry is tied closely to the country’s energy trajectory. Nations that have achieved sustainable automotive growth almost always align this with sustainable and low-cost energy production, creating the certainty required for long-term industrial investment.

South Africa has made considerable progress in this respect. In just three years, renewable energy’s share of the national mix has increased from 7% to 17%, with further projects in the pipeline. This shift provides the foundation for the adoption of new energy vehicles. On the current trajectory, Absa anticipates that 10% of vehicles on South African roads could be new energy vehicles by 2035. With coordinated collaboration between the public and private sectors, in the form of incentives, infrastructure and industry-wide initiatives, adoption could rise to as high as 25% over the same period. The opportunity is real, but it will only be unlocked if collaboration becomes the norm.

SA Auto Week: A platform for industry leadership:

This year’s SA Auto Week, which coincides with the 90th anniversary of naamsa and Transport Month, is against a backdrop of both the systemic challenges and transformative opportunities that face the sector. Bringing together OEM executives, government leaders, industry associations, financiers and logistics players, the event reaffirms the need for collaboration across the ecosystem.

Absa says it is proud to stand as the bank of the automotive industry. Over the past year, we have deepened our role as a trusted partner to clients and stakeholders, advancing strategic collaborations and delivering solutions tailored to mutual growth.

Absa says its efforts include enhancing customer experience in vehicle finance by reducing risk through targeted fraud models and integrating motor insurance early in the process. By partnering with OEMs such as Ford, Renault, BYD, BAIC, Foton, Proton, Omoda and Jaecoo, we’ve expanded consumer choice and seek ways to strengthen affordability.

Ford Credit was first to launch a Guaranteed Future Value product to the light commercial vehicle segment and offers improved affordability solutions to its customers. By innovating green finance with BYD, we are supporting NEV adoption nationwide. In partnership with Foton, the bank launched Foton Taxi Finance, providing taxi operators with an affordable, shorter path to ownership.

These initiatives reflect our sector expertise, pan-African reach and deep stakeholder trust, qualities that position us as the financial partner best placed to support the industry’s evolution.

Why finance matters: Absa’s strategic role:

The automotive value chain faces multiple pressures, global trade volatility, energy security risks, localisation demands and shifting consumer finance realities. Contributing more than 5% of GDP and employing hundreds of thousands, the sector is a cornerstone of South Africa’s economy and its long-term competitiveness.

Within this context, financial institutions cannot be passive enablers. Banks must be strategic partners, supporting first-time buyers, financing industrial capacity and accelerating the transition to green technologies. Our role is to ensure that the industry’s resilience is matched by the resources and innovation required for sustainable growth.

The future of the country’s automotive industry will be determined not only by manufacturers and policymakers, but by the strength of its partnerships and the financial systems that enable them.