Ten years ago, 75% of adults in South Africa owned a car; today, that number is down to 65%.
Rising interest rates and the increased cost of living may have something to do with this, but Brandon De Kock, director of storytelling at consumer insights consultancy WhyFive, thinks there is something else going on.
His BrandMapp data presentation titled Shifting sands: how SA’s middle market has changed in the past 10 years, reveals that, in 2014, a total of 6.226 million passenger cars were on the road compared to the 7.722 million that are being driven around today.
Yes, this is an increase of 1.5 million passenger vehicles, but taking into account the growth of the population over the past 10 years, the portion of car owners is smaller.
“There has been growth of the number of passenger cars on the road over the 10 years, but this has not kept pace with population growth.”
In the first three months of 2023, new passenger car sales were higher than during the same period of 2019, but a dramatic drop in April – possibly a result of interest rate increases, saw the number dip, before rising in May to match last year’s figures.
“But the line for this year should be below the blue line if all was going to hell (among consumers), so there is something else going on here.”
An interesting point to note on the graph, is that car sales have spiked every March since 2019 – apart from 2020, the year of Covid lockdowns. While he is not sure why this is the case, De Kock says it could coincide with the payout of annual bonuses for many people.
Remarkably, however, those who are buying cars in this tough economic climate are not opting for entry-level vehicles as one may have thought.
“The average car loan is R386,000, so this is not a question of everyone buying cheaper cars. The situation does not all look like doom and gloom,” he says.
The four cheapest cars on the market right now are the Suzuki S-Presso, Renault Kwid, Toyota Vitz, and Suzuki Swift, none of which are over R200,000.
How South Africa’s middle class has evolved over the past decade
De Kock’s data also reveals the following fascinating evolution trends of the country’s middle market since 2014.
For starters, Facebook had no competition.
We did not even have smart TVs back then, but now, a quarter of the market owns one.
There are even things that seemed so insignificant that they were not measured in 2014. Now, however, it is a different story.
He points out that fibre connectivity went from 18% to 42% during Covid, and says this is “driving everything”.
“Connectivity is modern fuel.”
If we follow all of these stories above, De Kock says another picture can be drawn, and this is what’s driving the consumer behaviours of the top 30% of earners in the country – a total of 13 million people who earn more than R10,000 a month.
“These people are more resilient than you think, and education is driving it.”
His data also reveals that South Africa’s middle-market and top earners have become more highly educated over the past 10 years.
“There is a whole other narrative that it feels like we are hiding,” he says, and this story is where the country could likely find hope for the future.
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