The government’s decision to raise the official vehicle cost threshold for ministers and premiers has intensified scrutiny of the government of national unity.
Finance minister Enoch Godongwana recently told parliament that the official vehicle cost cap for ministers had been increased from R800,000 to R1.1m — a decision that has sparked an uproar from civil society at a time when South Africans are calling for tax relief and greater support for vulnerable households.
Build One South Africa (Bosa) MP Nobuntu Hlazo-Webster asked the minister whether, in light of the adjustment, the National Treasury had quantified the total annual cost of official vehicle benefits and related perks. She also queried what fiscal considerations informed the decision to maintain or increase specific thresholds in the context of current budget constraints.
Godongwana said that despite provisions in the Guide for Members of the Executive, annual adjustments had not been implemented since 2020 due to fiscal consolidation, with the last revision taking place during the 2019 medium-term budget policy statement.
“The minister of finance had received numerous submissions and complaints that R800,000 — including VAT, security upgrades and maintenance plans — was no longer a suitable price, and departments found it difficult to procure vehicles that fitted within the price in the transversal contract,” he said.
He added that while the purchase of vehicles is a decentralised function across national and provincial spheres, the National Treasury requires departments to record details of all acquisitions and disposals, as well as the costs associated with official-use vehicles.
It was increasingly difficult for departments to source vehicles fit for official duties within the R800,000 threshold. Accordingly, the cap was revised to R1.1m
— Enoch Godongwana, finance minister
“A reporting template was developed for this purpose to allow National Treasury and other relevant stakeholders to quantify costs for oversight and reporting. Other related perks provided in the Guide for Members of the Executive fall outside the purview of the minister of finance.”
Godongwana said the Treasury’s industry analysis confirmed that inflation over the past five years had eroded the value of the threshold, with prices breaching the cap for most vehicles.
“It was therefore increasingly difficult for departments to source vehicles fit for official duties within the R800,000 threshold. Accordingly, the cap was revised to R1.1m.
“The threshold should not be seen as a target price. Departments are allowed and encouraged to use their own discretion in procuring vehicles that cost less than the price threshold, inclusive of VAT, security upgrades and maintenance plans, where possible.”
Ayesha Hatea, director of research and consulting at TransUnion South Africa, told Business Times that SUV prices in South Africa have shown signs of stabilisation over the past year rather than sharp increases.
“TransUnion’s Mobility Industry Review for the fourth quarter shows SUV and MPV prices rising by 2.1% year on year, indicating moderated inflation compared with earlier post‑pandemic periods," she said. “This reflects improving supply conditions and rising competition across the SUV segment.
“Luxury sedans, by contrast, remain priced at the higher end of the market, with pricing more sensitive to exchange rate volatility and imported input costs, resulting in limited affordability and a narrower buyer base.”
Looking ahead, Hatea said vehicle prices are expected to continue rising in nominal terms, albeit unevenly across segments. SUVs are likely to see contained price growth, supported by competitive dynamics and a broader range of models across price bands.
It is beyond shocking that this reckless decision comes from the same Treasury that has cried poverty, attempted to increase VAT, and refused to adjust tax brackets for low- and middle-income workers for inflation for two years
— Matthew Parks, Cosatu parliamentary co-ordinator
“Luxury sedans may face slightly higher inflationary pressure, particularly if global energy or shipping costs rise, given their greater exposure to imported components. While geopolitical developments may introduce short‑term volatility, affordability constraints and lender discipline are expected to limit the extent to which these pressures are passed on to consumers.”
Asked about the option of cheaper Chinese SUVs and sedans, Hatea said the growing entry of Chinese manufacturers has materially altered the market. These brands now offer SUVs across a wide range of price points, with specifications increasingly matching global standards for build quality, technology and safety.
“As a result, it remains possible to access well‑specified SUVs within the previous R800,000 threshold, although options in the luxury sedan segment are more limited. This suggests that market evolution — rather than policy change alone — has expanded choice at lower price levels, allowing thresholds to remain workable despite broader vehicle price increases.”
Cosatu parliamentary co-ordinator Matthew Parks said the ANC-aligned labour federation strongly condemned the increase as “tone deaf” and an affront to the working class, who have been urged to tighten their belts.
“It is beyond shocking that this reckless decision comes from the same Treasury that has cried poverty, attempted to increase VAT, and refused to adjust tax brackets for low- and middle-income workers for inflation for two years,” Parks said.
He said the Treasury “gushes sympathy for politicians”, but has adjusted the R370 social relief of distress (SRD) grant for inflation only once since its introduction in 2020.
“This callous decision highlights a crisis of budget priorities and morality within the state, where R4bn is allocated for bodyguards for politicians, while only R3bn can be found for small business development.”
Parks said Cosatu had called on President Cyril Ramaphosa to intervene and reverse the decision, arguing that the government cannot continue to impose “brutal austerity” on frontline public services while finding millions to benefit public representatives.
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