The Automotive Business Council welcomes the South African Reserve Bank’s (SARB) decision to maintain the repo rate at 6.75%. The decision reflects a prudent and measured response to a rapidly evolving global environment.
The decision comes at a time when South Africa has made notable progress on inflation, with headline consumer price inflation moderating to 3.0% in February 2026 - aligning with the midpoint of the SARB’s target range. Consumers have, in turn, been cushioned by a cumulative 150 basis points of rate cuts since September 2024. Q1 consumer confidence has also recorded a second consecutive quarterly improvement, though overall sentiment remains in negative territory. This reflects a period of improved macroeconomic stability, anchored inflation expectations, and a more credible monetary policy framework.
These fundamentals have, in recent months, provided a supportive tailwind to new vehicle sales, as reflected in the performance recorded over the first two months of the year.
The global environment has, however, shifted materially. A sharp escalation in oil prices, driven by heightened geopolitical tensions, has introduced renewed upside risks to the inflation outlook, placing recent disinflation gains under pressure and constraining the pace at which monetary easing can proceed.
In this context, naamsa recognises the SARB’s continued commitment to price stability and its datadependent approach to policy.
The implication of today’s decision is that interest rates are likely to remain elevated for longer than previously anticipated. For the automotive sector, where the majority of vehicle purchases are creditfinanced, this has direct consequences for consumer affordability and the pace of sustained demand recovery. While relatively stable domestic fundamentals have supported recent cyclical growth, these conditions are increasingly giving way to a more constrained operating environment.
Importantly, the decision by the South African Reserve Bank to maintain the repo rate follows a period in which cyclical recovery had begun to provide early signals of a potential transition toward more durable, structural growth in the domestic market. However, against the backdrop of heightened global political uncertainty, ongoing geopolitical tensions, and increased fragmentation in trade and capital flows, the persistence of elevated interest rates may temper this transition, delaying the consolidation of underlying demand fundamentals and reinforcing the cyclical nature of the current recovery phase.
Households are about to be confronted with a significant fuel price shock, which will result in substantial increases expected to take effect in April 2026. These increases, compounded by the implementation of higher fuel levies, represent a material escalation in the cost of living for South Africa. Rising fuel prices directly affect the total cost of vehicle ownership, reducing disposable income and limiting the ability of consumers to commit to large, financed purchases such as vehicles.
naamsa underscores that the automotive market has demonstrated encouraging resilience throughout 2025 and into the early months of 2026, with new vehicle sales recording solid year-on-year growth. This momentum reflects the cumulative impact of earlier interest rate reductions, improved consumer confidence, and a gradual recovery in economic activity, reinforcing a positive trajectory for the sector.
This performance continues to reflect the underlying strength and adaptability of the South African automotive industry, which has, over decades, consistently demonstrated its ability to respond to changing economic conditions. From global and domestic disruptions to shifts in market dynamics, the industry has recalibrated effectively, safeguarding production continuity, maintaining competitiveness, and sustaining its contribution to the broader economy. This institutional resilience, anchored in deep global integration, operational agility, and strong industry coordination, remains a defining feature of the sector.
Within this context, current cost dynamics across the economy, including fuel prices and administered costs, are being managed within an operating environment that continues to support stability and continuity. The interconnected nature of the automotive value chain, spanning logistics, distribution, and production, continues to demonstrate its capacity to adjust efficiently to evolving conditions.
naamsa further notes that the decision by the South African Reserve Bank contributes to a stable and predictable macroeconomic environment. Such stability is critical in supporting investment planning, sustaining consumer confidence, and enabling the sector to build on its current growth momentum.
The South African automotive sector therefore remains well-positioned, underpinned by steady demand, improving economic fundamentals, and a proven track record of resilience. This positions the industry to continue playing a central role in driving industrial development, supporting employment, and enabling mobility across the economy.