Rich South Africans feel the pain – and luxury car sales show it

Vehicle sales across the three dominant luxury car manufacturers in South Africa – Audi, Mercedes-Benz, and BMW – have more than halved in the last decade. Total sales down from 71,889 in 2014 to 26,202 in 2023. 

At the same time, sales of cheaper vehicles from Suzuki, Haval, and other Asian manufacturers have skyrocketed.

Suzuki, in particular, has seen tremendous growth, with their annual sales growing exponentially in the past decade from 6,402 to 47,201. 

It shows that South Africans are ‘buying down’ as inflation and lacklustre salary growth diminish their spending power. 

The declining affordability of luxury vehicles in South Africa can be seen in how much their prices have risen compared to the average salary. 

Data from Bankserv Africa showed that in 2014, the average South African salary was around R11,641. At the same time, the cost of an entry-level BMW 3-series was R341,000. 

A decade later, the average South African take-home pay has risen to R15,409. An entry-level BMW 3-series, in comparison, has skyrocketed to R846,000. 

The average salary in the past decade has grown by 32.4%, while the price of a BMW 3-series has risen 148%. 

Daily Investor contacted Audi, BMW and Mercedes-Benz to find out why they thought the luxury car market had suffered such a severe decline in South Africa over the past decade. 

BMW said the overall passenger car market has contracted significantly since 2014, and it, as a premium brand, has been impacted by this. 

It said that due to the difficult economic environment in South Africa, a buying-down trend has emerged in the passenger car market.

Combined with an increased number of imported vehicles from Asia, consumers have been spoilt for choice. 

BMW said decreased consumer affordability has been driven by higher interest rates, exchange rates, and inflation, which affect business confidence and consumer sentiment. 

Audi also said it is crucial to look at the decline in the premium market and passenger car sales in general. Despite the decline, it has managed to maintain and, in some years, increase its market share. 

South Africans are under financial strain and choosing to buy down or not replace their vehicles at all, or much later than they usually would, the brand said. 

The buying-down trend can be seen clearly in the graph below, which compares the sales of Audi, BMW, and Mercedes-Benz versus cheaper alternatives such as Suzuki, Haval, and Chery. 

The sales of the German automakers have steadily declined over the past decade, while Suzuki, Haval, and Chery sales have surged.