Good news for South Africans who want to buy a car

The South African Reserve Bank’s (SARB) decision to hold interest rates at current levels brings good news for South Africans looking to purchase a new car.

The SARB’s Monetary Policy Committee (MPC) announced on 23 July that it would hold the repo rate at 7.00%, with the prime lending rate remaining at 10.50%.

This move came as a surprise to many, with industry experts and market analysts across South Africa predicting that the MPC would instead raise rates by 25 basis points.

The Chairperson of the National Automobile Dealers’ Association (NADA), Brandon Cohen, welcomed the MPC’s decision.

Cohen said that holding rates would promote household affordability and protect the strong momentum seen in South Africa’s automotive sector in the first half of 2026.

“Given that much of the market braced for a tightening of the monetary policy, the decision to hold interest rates steady is a welcome relief for consumers and vehicle retailers,” Cohen said.

“Maintaining the prime lending rate at 10.50% provides much-needed support for consumer affordability and gives prospective buyers the confidence to move forward with finance applications.”

According to data from the National Association of Automobile Manufacturers in South Africa (NAAMSA), domestic new passenger vehicle sales between January and June totalled 223,911 units.

NADA said that rate stability was key to maintaining this strong sales momentum as South Africa’s new vehicle market looks to break 600,000 cumulative sales by the end of 2026.

Despite current economic pressures placed on South African households, such as rising fuel prices, NADA said the decision to hold rates would strengthen showroom floor demand.

“Vehicle purchasing is typically a long-term financial commitment, and interest rate stability plays a central role in driving consumer sentiment,” Cohen explained.

“With rates remaining flat, monthly instalment calculations remain manageable. This allows the positive momentum we’ve seen across both passenger and commercial segments to continue uninterrupted.”

Fuel prices still a concern for motorists

While the MPC’s decision to hold rates may encourage South Africans to continue to purchase vehicles, fuel price volatility could dissuade them instead.

The latest predictions from the Central Energy Fund estimate that diesel prices could increase by as much as R1.10 in August, following two consecutive months of price cuts.

This is mainly due to two factors. The first is Russia’s ban on diesel exports until 31 July, as it attempts to restore its domestic market.

This has coincided with renewed conflict in the Middle East between the United States and Iran as a ceasefire deal between the two nations broke down.

As a result of these two factors, the price of Brent Crude oil rose above $100 per barrel for the first time since May, but has since fallen back below that level.

Since South Africa lacks the capacity to produce its own fuel, it is a net importer of crude oil and refined products, making it highly susceptible to oil price fluctuations.

The price of petrol currently sits around R6 per litre higher than before the war began, while diesel is around R7 per litre higher.

The volatility of fuel prices has been a major contributor to South Africa’s inflation, which reached 5% in June 2026, its highest level in two years and well above the SARB’s 3% target.

Many expected the SARB to increase the repo rate on the back of rising inflation, citing the renewed conflict in the Strait of Hormuz as a major concern for fuel prices.

While SARB Governor Lesetja Kganyago conceded that this was a notable point of contention, the MPC ultimately decided to hold rates, citing that the outlook remained too uncertain.

“For fuel, the recent volatility in oil prices shows that we face both upside and downside risks, depending on how the Middle East conflict evolves,” Kganyago said.

“The inflation outlook has improved slightly, but is still too high, while growth is weak. We are setting policy to achieve 3% over time, ensuring the current supply shock does not de-anchor inflation expectations.”