How much you need to earn to afford a Merc in South Africa: 2014 vs 2024

The cost of a Mercedes-Benz vehicle has more than doubled in the past decade, and today, people need to earn up to R50,000 more per month to afford the same car as in 2014.

In 2024, more than 70% of all the cars in South Africa now cost more than R500,000.

One key reason for this spike concerns the Covid-19 pandemic, which saw car factories around the world shut down and lay off workers when lockdown restrictions were enforced, and the demand for cars dropped.

After the easing of restrictions, consumer spending quickly rebounded, while production was slower to return to pre-Covid levels. This created a supply-and-demand problem, leading to inflation.

In South Africa, the poor performance of the local economy and the rand/US dollar exchange rate have magnified this effect, making it exponentially more expensive to import and sell vehicles here.

To reflect the magnitude of vehicle price increases, BusinessTech looked at the prices of a Mercedes-Benz GLA200 in 2014 compared to today in 2024 and how much you need to afford it in their respective time periods.

In 2014, a GLA200 cost R398,800.

According to financing experts, individuals should spend no more than 25% of their monthly income on vehicle-related costs, which means they would have required an estimated salary of around R35,000 per month.

This assumes the cars are financed over five years (60 months) at an annual interest rate of 10.5% (prime in 2014 (9.25%) +1.25%, with a 0% deposit or balloon payment.

Fast-forward to 2024, and the vehicle now costs R922,841—a R524,000 increase or 131%—which requires a salary increase of R50,000 or 141% to R84,300 per month to afford the same car.

This assumes the same parameters as in 2014 but at an annual interest rate of 13% (2024 prime (11.75%) +1.25%).

To put this into perspective, the range-topping Kia Picanto is now R325,995, which is only R72,800 or 18% less than the Mercedes-Benz GLA200 back in 2014.

The increase in the cost of this Mercedes-Benz vehicle is more than double the inflation rate over the same period (66.1%), showing the rapid and unsustainable increases in car prices over the past decade.

What’s worse is that salaries have just kept behind inflation since 2014.

According to Stats SA, the average formally employed non-agricultural worker in 2014 earned an average of R16,400 per month, which has increased to R26,894 in 2024—representing an increase of 64% (2.1% below inflation).

When comparing the cost of a Merc to an average salary, those who could afford a GLA200 in 2014 needed just over double the average salary.

In 2024, they now need to earn triple the average salary to afford the same car.

Looking at another model revealed a similar outcome to the GLA200.

In 2014, a Mercedes-Benz C200 cost R436,600, and it now costs R1,042,139—a 138% increase in price over the decade.

This massive increase in prices is one of the several reasons why premium European car brands have seen a notable drop in sales over the same period, as outlined by the National Automobile Dealers Association (NADA).

Sales for Audi, Mercedes-Benz, and BMW have more than halved in the last decade, with total sales declining from 71,889 in 2014 to 26,202 in 2023—a concerning 63.5% decline.

According to Lightstone’s latest statistics, sales for Audi, BMW, Mercedes-Benz, and Volvo dropped from 28,757 units in 2022 to 26,836 in 2023, a 6.6% decline, which is around the annual average since 2014 (6.35%).

What’s worse is this trend seems to be accelerating, with year-to-date sales of these car brands as of April 2024 reflecting a drop of over 10% compared to the same period in 2023.

Read: How much a car’s value drops the minute you drive it off the showroom floor