Car prices have risen at an alarming rate in South Africa these past few years, as evidenced by the fact that there are only four new vehicles that can actually be bought on the country’s average take-home salary.
The nominal take-home pay for working South Africans in September 2023 was R15,673 per month, reflecting a small month-on-month growth compared to August’s R15,605 per month, according to BankservAfrica’s Take-Home Pay Index.
It also shows an appreciable 4.1% increase compared to September 2022, but this is less than the 6.7% increase in new car prices recorded over the same period, based on TransUnion’s latest vehicle pricing index.
Making matters worse is that the cost of vehicle ownership is estimated to have gone up by a worrying 50.6% since 2021, with costs increasing by 14% since November 2022 alone.
In fact, a WesBank report from May 2023 found that the average cost of ownership, which includes finance instalments, fuel, and maintenance, came to R11,628 per month – roughly 80% of the mean take-home salary.
Redefining affordability
When it comes to purchasing a new car, institutions such as WesBank strongly advise that a person does not commit more than 20 to 25% of their gross (before tax) monthly salary on vehicle repayments so as to remain financially stable.
The current take-home salary is R15,673 per month, which can be adjusted to R17,362 per month to account for income tax. This gives local motorists an allowance of just R4,341 per month to spend on a finance plan for a new set of wheels if we follow the 25% rule.
Assuming the individual takes out a standard 5-year/60-month plan with no deposit at the current prime interest rate of 11.75%, they will have a budget cap of about R192,000 for a new car, of which only four models fit the bill, as you can see below.
Click on the underlined prices for more information.
Suzuki S-Presso
- Starting price – R169,900
- Estimated repayment – R3,854 per month
Suzuki Celerio
- Starting price – R183,900
- Estimated repayment – R4,163 per month
Toyota Vitz
- Starting price – R189,900
- Estimated repayment – R4,295 per month
Renault Kwid
- Starting price – R192,999
- Estimated repayment – R4,365 per month
Keyword: Every new car you can buy on South Africa’s R15,000 average salary