New-energy vehicle (NEV) adoption in South Africa may be rising but remains behind the rest of the world, primarily due to the heavy price tags of these autos.
While a total of 4,668 NEVs were sold in the country in 2022, up 521% over 2021, this still pales in comparison to the total of half a million internal-combustion-engine (ICE) cars sold during the same time.
Only 26% of the available hybrid offerings on the market can be had for under R1 million, and as such, their buyers tend to be on the upper end of the income spectrum.
In its latest Absa Vehicle and Asset Finance Bulletin, the National Association of Automobile Manufacturers of South Africa (Naamsa) found that approximately 50% of hybrid buyers have monthly incomes exceeding R60,000, an impressive 2.4 times the average salary in the country, whereas only 35% of ICE customers could say the same.
Additionally, a larger portion of hybrid customers are in a managerial role when compared to their ICE-buying counterparts, and more hybrid owners are private and business bank customers than ICE owners, said Sharon Modiba, Naamsa Executive: Economic Policy and Data Management.
Age does not seem to have a significant impact on consumer preference, either, with 82% of hybrid customers being 35 years or older, and similarly ICE customers accounted for 79% of purchases in this age range.
Green conscience
The Naamsa bulletin revealed that NEVs are typically purchased by consumers who are “concerned about environmental sustainability and who value the benefits of alternative energy sources,” said Modiba.
“This group of consumers tends to be more environmentally conscious and for those who can afford to, they are willing to pay a premium for cars that are more sustainable and have lower emissions.”
To that end, the top-performing models in the NEV space in 2022 were the Toyota Corolla Cross Hybrid, Toyota RAV4 Hybrid, and Haval H6 HEV – which collectively accounted for 78% of all the NEV transactions for the year.
These models have starting prices of R458,300, R719,700, and R669,950, respectively, whereas the average financing amount for a new vehicle is around R393,000, illustrating the higher barrier to entry of NEVs.
Fortunately, “the introduction of more hybrid model options [in 2021 and 2022] that are relatively well priced has had a positive effect on NEV adoption,” said Modiba.
“The introduction of the Corolla Cross Hybrid appears to have been a significant catalyst in the inflection point seen in the 2022 NEV sales, it accounted for 58% of NEVs sold in the new vehicle market in 2022.”
Last year, a combined 4,668 cars were sold in the NEV category, trumping 2021’s 896 sales by over 500%. Naamsa expects this trend to continue going forward as more and more affordable entries come into the market.
“It seems reasonable to assume that the continued introduction of NEVs into an already-popular vehicle segment such as the entry-level, SUV, and crossover segments, at affordable prices, will likely have a positive impact on future NEV adoption,” said Modiba.
“Furthermore, adoption seems to increase with the availability of choice in models as seen in other global regions.”
In 2022, NEVs had a 1% share in total sales, which according to Naamsa is projected to rise to 20% by 2025.
By 2030, NEVs are expected to take up 40% of the overall mix, and by 2050, the organisation anticipates that 60% of all the new cars sold in South Africa will be partially electrified.
Keyword: Salary, job, and age of the average buyer of hybrid cars in South Africa