Interest rate relief sparks surge in used car sales

South Africa’s two interest rate cuts in 2025 have brought much-needed relief to households and are reshaping the used car market.

After years of relentless financial pressure, the Reserve Bank's decision to trim the repo rate by 50 basis points has not only eased borrowing costs but also spurred renewed demand for mobility. 

Between January and June this year, 181,287 used vehicles were sold, according to AutoTrader’s 2025 midyear industry report. This generated R75.85bn in sales, representing a 7% increase compared with the same period in 2024 — a clear sign that the policy shift is filtering through to everyday buying behaviour. 

Financing becomes more accessible 

Vehicle finance has long been one of the first areas where South Africans feel the effects of monetary policy. Even a modest cut in interest rates can translate into hundreds of rand saved each month on instalments, and for many households, that can mean the difference between delaying a purchase and signing a deal. 

With the cost of food, electricity and fuel continuing to climb, the rate cuts provided a timely breathing space. Families who had been sitting on the sidelines now find themselves able to re-enter the market, while younger buyers (often first-time entrants) are taking advantage of improved affordability to secure their first cars. 

What buyers are choosing 

The types of vehicles being bought highlight the push and pull between aspiration and pragmatism. Compact hatchbacks such as the Volkswagen Polo, Polo Vivo, Suzuki Swift and Toyota Starlet remain popular choices, offering a blend of affordability, fuel efficiency and manageable running costs. These vehicles are desirable to urban drivers, students and professionals looking for value without overstretching their budgets.

At the other end of the spectrum, dependable bakkies, particularly the Ford Ranger and Toyota Hilux, continue to dominate. Their dual role as practical workhorses during the week and versatile family vehicles at weekends makes them a strong choice for buyers who need durability and flexibility.

The resilience of this segment also reflects the broader economic environment in which small businesses and tradespeople rely heavily on reliable, rugged transportation. It’s worth noting that seven of the 10 best-selling used vehicles in the first six months 2025 were a hatchback or bakkie.

Pricing holds steady

Despite the increase in demand, pricing in the used car sector has shown remarkable stability. In the first six months of the year the average used car on AutoTrader sold for R418,613, a modest 3% rise compared with 2024.

The average age of vehicles being traded during this period has held at six years, suggesting that while buyers are prepared to spend slightly more for newer technology and reliability they are still firmly anchored in value-driven decision-making. 

This stability benefits both sides of the transaction. Buyers gain confidence knowing prices aren’t racing ahead while sellers (from dealerships to private individuals) see steady demand without the volatility that often characterises new car sales during periods of economic uncertainty. 

Consumer sentiment and confidence 

The rate cuts also feed into broader consumer confidence. For years South Africans have wrestled with rising debt costs and diminished disposable income. A softer interest rate environment signals a shift in sentiment — that conditions may be improving, however gradually. That confidence is being expressed in used car sales, a sector often regarded as a barometer of financial health at a household level. 

“Lower borrowing costs have put car ownership back within reach for many South Africans,” said George Mienie, CEO of AutoTrader. “Our data shows consumers are prioritising affordability while still aspiring to drive reliable, trusted brands.”

Outlook for the remainder of 2025

Looking ahead, the outlook for the used car market will largely hinge on whether the trend of rate stability persists. If inflationary pressures remain under control and no further shocks hit the economy, momentum could be sustained into the second half of the year. 

The possibility of additional rate cuts later in 2025 cannot be ruled out, and if realised, could extend the affordability window further. That would provide further support for the used car sector as new car sales continue to face headwinds from higher pricing and stretched household budgets. 

Mobility in a tight economy 

In a country where access to reliable transport directly influences economic opportunity, the used-car market has long played a vital role in ensuring mobility for most South Africans. The latest sales surge highlights the sector's sensitivity to shifts in financial policy and the rapid response of households when even a small measure of relief is offered. 

“If 2024 was defined by stagnation and hesitation, 2025 so far has shown a softer monetary stance can breathe life back into the everyday economy,” said Mienie.

“For thousands of households, the decision to reduce the repo rate hasn’t been an abstract policy move. It’s meant the difference between relying on unreliable transport and getting behind the wheel of a car that fits their budgets and needs.”