This number includes passenger vehicles and excludes medium and heavy commercial vehicles. <\/p>\n\n\n\n
Of these models, 1,082 now cost over R500,000<\/strong>, representing almost 75% of the new car market \u2013 meaning only 25% are priced under the half-a-million rand mark. <\/strong><\/p>\n\n\n\n Why?<\/strong><\/p>\n\n\n\n Car prices have increased significantly in the past few years due to several factors, such as inflation, supply chain disruptions, safety and legal requirements, and changing consumer preferences. <\/p>\n\n\n\n On the supply side, Top Auto reported<\/a> that the Covid-19 pandemic caused a drop in demand for cars, which led to price hikes from most car brands to stay in business.<\/p>\n\n\n\n As countries began to lift their pandemic restrictions, consumer spending bounced back to pre-Covid levels. <\/p>\n\n\n\n However, many companies were still operating at a reduced output due to worker layoffs and factory shutdowns. <\/p>\n\n\n\n This created a supply and demand imbalance for certain goods, including cars and their components, such as semiconductors, resulting in increased prices.<\/p>\n\n\n\n South African economic conditions exacerbate car import costs due to high taxes, import duties and a weakening rand exchange rate.<\/p>\n\n\n\n A more long-term driver behind rising car prices is regulations, which vary from market to market but broadly entail the same things.<\/p>\n\n\n\n An example is safety equipment, which is a crucial component of modern cars. <\/p>\n\n\n\n In countries such as South Africa and the European Union, new cars must be equipped with features such as anti-lock brakes, airbags, seatbelts, parking sensors and cameras. <\/p>\n\n\n\n Additionally, consumer expectations have influenced the standard features in modern cars, which now commonly include infotainment touchscreens, air conditioning, cruise control, LED headlights and more.<\/p>\n\n\n\n However, incorporating these features into cars comes at a cost, and they are not inexpensive.<\/p>\n\n\n\n A less obvious trend has also led to increased prices, with one being the sharp rise in popularity of the SUV body type.<\/p>\n\n\n\n Over the last decade, SUVs and their smaller crossover counterparts have become increasingly popular, resulting in a decline in the demand for more affordable hatchback and sedan styles. <\/p>\n\n\n\n Consequently, several hatchback and sedan models have been discontinued and replaced with new SUV models to meet the changing market demands.<\/p>\n\n\n\n One local example is the Ford Puma, which now sits as Ford’s entry-level passenger vehicle at a starting price of R569,900, following the discontinuation of the more affordable Fiesta and EcoSport.<\/p>\n\n\n\n TopAuto<\/a>\u00a0reached out to Ford South Africa to get more clarity on its newcomer\u2019s price, which they provided,\u00a0pointing to the target market and the exchange rate as the main determining <\/strong>factors.<\/p>\n\n\n\n It’s worth noting that high-end cars usually offer a wider range of models than affordable cars, making the price difference between the two categories seem even greater. <\/p>\n\n\n\n For instance, the Porsche 911 offers a massive selection of 31 different models to choose from. The cheapest one costs about R2,158,000. <\/p>\n\n\n\n On the other hand, one of the most affordable hatchbacks in South Africa, the Suzuki Celerio, offers only three models to choose from, with a starting price of R188,900.<\/p>\n\n\n\n There are various reasons for this, but one of the main factors is that it is not practical or feasible for car manufacturers to create a wide range of mass-market models when only a few options are actually required. <\/p>\n\n\n\n However, for luxury brands, the price is ironically less of a concern once you enter the multi-million-rand bracket. <\/p>\n\n\n\n At this level, customers are less interested in the cost and more focused on finding a vehicle that meets their unique preferences.<\/p>\n\n\n\n Regardless of the circumstances, the outcome remains the same for South African drivers. They are discovering that car prices are increasing faster than their salaries in real terms<\/a>. <\/p>\n\n\n\n To put this into perspective, experts have estimated South Africans earn an average salary of R26,086 and can afford a car priced up to R222,000 (assuming you spend 25% of your monthly income on vehicle-related expenses).<\/p>\n\n\n\n This means over 75% of the cars on the market in South Africa are only affordable to those who earn more than double that of the average formally employed South African. <\/strong><\/p>\n\n\n\n This is especially concerning when combined with the continued rise in the cost of living, including expenses such as food, petrol and other necessities in the country.<\/p>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/09\/Ford-Puma-1024x683.jpg\")
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