The National Automobile Dealers’ Association (NADA) says the South African Reserve Bank’s decision to keep the repo rate unchanged provides a degree of short-term certainty for consumers and the motor industry, though an anticipated steep rise in fuel prices next month could strain household finances and temper any immediate uptick in vehicle sales.

The Monetary Policy Committee’s decision to leave the repo rate on hold keeps the prime lending rate at 10.25%. According to dealers, the move removes a significant point of uncertainty that had been delaying some buyers.

Car buyers will have to budget carefully from next month

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NADA chairperson Brandon Cohen says the decision “may help unlock” demand from consumers who had been holding off pending greater clarity on interest rates.

“There is evident appetite in the market, and this decision may help unlock some of it,” Cohen adds. “Consumers have done the groundwork and, with greater certainty on rates in the near term, we expect more of them to proceed with their purchase decisions.”

Short?term relief, longer?term pressure

Dealers report sustained levels of engagement, with prospective buyers submitting finance applications and showing clear intent to purchase. According to NADA, this activity points to pent?up demand that could translate into sales now that the immediate question around rate movement has been settled.

However, the association cautioned the relief may prove limited. With global oil markets volatile and geopolitical risks unresolved, the SARB has signalled a cautious stance. Dealers note that the prospect of interest rates remaining elevated for an extended period remains a real risk.

In addition, industry sources are preparing for fuel price increases of around R5,76 a litre for petrol and R10 a litre for diesel next month, figures that would significantly raise household transport costs.

Higher fuel bills are expected to reduce disposable income available for vehicle deposits and monthly instalments. Dealers say this could shift buyer behaviour towards smaller, more fuel-efficient models or the used-vehicle market.

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What consumers can expect

  • Monthly budgets are likely to tighten. The combination of unchanged borrowing costs and higher fuel expenses will put pressure on household cash flow, particularly for commuters and fleet operators.
  • Purchasing patterns may shift. Dealers anticipate greater interest in compact cars, hybrids and second-hand vehicles as buyers seek to manage running costs.
  • Finance decisions remain sensitive. Even with the repo rate on hold, the prime rate remains elevated, meaning instalments are higher than they would be in a lower-rate environment. Affordability continues to be a decisive factor for many buyers.

Dealers’ outlook and the road ahead

NADA emphasised the resilience of South Africa’s dealer network despite challenging trading conditions. The association expects interest rates to remain on hold in the near term but said any future easing would depend on improved clarity around global factors, notably oil prices, supply stability and geopolitical developments. For now, the threshold for rate cuts has risen.

“Greater economic certainty and eventual monetary easing will be critical in unlocking pent?up demand and supporting growth in vehicle sales,” says Cohen.

Consumer tips as costs rise

Industry advisers recommend that consumers:

  • Recalculate affordability to factor in higher fuel costs before committing to a loan.
  • Prioritise fuel efficiency when selecting a model to reduce total cost of ownership.
  • Shop around for financing to secure the most competitive terms available at prime 10.25%.

Bottom line

The SARB’s decision to hold the repo rate has removed a key barrier for potential car buyers, but the expected fuel price increase next month could dampen any immediate recovery in retail vehicle sales. While dealers may see enquiries convert into purchases, many consumers are likely to trade down, extend finance periods or postpone buying decisions as they absorb higher running costs.

Colin Windell for Colin-on-Cars in association with

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