How much you must earn to afford the cheapest Audi, BMW, and Mercedes

Owning a premium German car in South Africa has become a luxury reserved for the country’s top earners.

As prices soar well above inflation, the affordability of the cheapest models from Audi, BMW, and Mercedes-Benz now requires buyers to be in the upper-income brackets.

According to the latest TransUnion Vehicle Pricing Index (VPI), the cost of new vehicles rose significantly in the second quarter of 2024.

This index, which tracks pricing trends for new and used vehicles from 15 top-volume manufacturers, showed a 4.4% year-on-year increase in new car prices during this period—a rate 1.5% higher than inflation.

While most vehicle segments experienced price hikes, hatchbacks and hybrids were hit hardest, with price increases of 7.6% and 4.6%, respectively.

Even premium SUVs and electric vehicles, which saw relatively modest price growth at 2.7% and 1.1%, contributed to the overall trend.

Hatchbacks, often the entry-level models for luxury brands, have seen the steepest price hikes.

This is evident in the cost of the Audi A1, BMW 1 Series, and Mercedes-Benz A-Class. The Audi A1, currently the most affordable option among the three, is priced at R523,200.

The BMW 1 Series follows at R713,395, while the Mercedes-Benz A-Class tops the list at R826,024.

These figures highlight how much the landscape of vehicle affordability has shifted, with over 70% of all cars in South Africa now costing more than R500,000.

Several factors contribute to these rising costs. The weak rand and a sluggish local economy have made it increasingly expensive to import and sell vehicles in South Africa.

This has had a profound impact on sales for premium brands. Over the past decade, combined sales for Audi, BMW, and Mercedes-Benz have plummeted by 63.5%, falling from 71,889 units in 2014 to just 26,202 units in 2023.

At the same time, competitors from other markets, particularly China, have gained traction by offering competitive pricing, advanced technology, and solid build quality, reshaping the market dynamics.

The affordability challenge becomes even starker when considering the financial commitment required to own one of these vehicles.

Using the Audi A1 as an example, financing the car over 60 months at a 12.5% lending rate (prime rate of 11.25% plus 1.25%) with no deposit would result in a monthly instalment of approximately R11,867.

Financial experts advise that car payments should not exceed 25% of your monthly income. By this standard, you would need to earn at least R47,500 per month to comfortably afford this vehicle.

To put this into perspective, data from the World Inequality Database indicates that earning R47,500 places you among South Africa’s top 10% of income earners.

This means 90% of South Africans earn less than this threshold, underscoring the exclusivity of owning even the cheapest models from these premium brands.

The long-term trends also paint a stark picture of escalating costs.

For instance, a Mercedes-Benz GLA200 that cost R400,000 in 2014 now commands a price of over R926,000, marking a staggering 131.4% increase in just 10 years.

Such steep price growth further emphasizes the financial hurdles prospective buyers face.

The cheapest Audi, BMW, and Mercedes-Benz are listed below, along with the starting price, estimated monthly instalment, and monthly salary required to afford the vehicle.

Audi A1

• Starting price: R523,200
• Monthly instalment: R11,867
• Estimated monthly salary required: R47,500

BMW 1 Series

• Starting price: R713,395
• Monthly instalment: R16,146
• Estimated monthly salary required: R64,600

Mercedes-Benz A-Class

• Starting price: R826,024
• Monthly instalment: R18,680
• Estimated monthly salary required: R75,000