Research and data group Lightstone has compiled a list of cars that you can afford on your current salary – showing how much more you’d need to earn per month to keep affording them.
The latest data from the National Association of Automobile Manufacturers of South Africa (Naamsa) light commercial vehicle sales saw a decline of 6.1% year-on-year in November 2018, while the passenger car sector experienced a 5.4% drop.
The medium and heavy commercial vehicle market, meanwhile, saw a 17.5% and 16.2% increase, respectively.
According to vehicle financing group WesBank, the drop in domestic sales could be attributed to the latest interest rate hike, which pushed lending rates up by 25 basis points – however, despite the hike and the pressures on South African consumers, the car market “remains robust”.
Wesbank said its data showed that South Africans are still keen to buy cars – though a lot of the focus has shifted to the used car market. This, the group said, is indicative of stress in the new car market amid the pressures on household disposable income.
The group’s data also showed that motorists are holding onto their cars for longer.
Naamsa, meanwhile, said that it expects the car market to remain under pressure over the medium term, anticipating only a modest recovery.
Lightstone’s data, looking at the salary changes between 2017 and 2018 needed to afford the same vehicle shows what pressure consumers have come under.
In 2017, someone who earned R18,400 a month could afford to buy a new Toyota Etios 1.5 Xi – by 2018, the salary requirement had increased by almost 9% to R20,000 a month for the same vehicle.
The data is based on current South African vehicle prices and salaries (May 2018), and assumes that people are not going to spend more than 20% of their gross monthly income on financing a car. The calculations also assumes that the cars are financed over five years at an interest rate of prime + 2%.
This trend is seen across almost all the salary bands covered by Lightstone, with only five bands coming under CPI (5.2%).
With the car price in the top band (Maserati GranCabrio) not increasing between 2017 and 2018, the required salary actually decreased.
The table below outlines how salaries will have to change to afford the same type of vehicle: