South Africa’s average salary has seen a 9.2% increase from the fourth quarter of 2021, allowing individuals to afford a wider range of passenger vehicles currently available on the market. According to Stats SA’s most recent Quarterly Employment Survey (QES), the average salary in South Africa is now R26,032 per month. With this income, it is possible to afford 26 different passenger vehicles, assuming no more than 25% of one’s monthly salary is spent on vehicle-related costs.
The University of Cape Town’s Liberty Institute of Strategic Marketing reveals that a household needs to earn around R22,000 to be considered middle class in South Africa. This means that the average formally-employed non-agricultural worker in the country fits into the middle-class category. Industry experts recommend spending no more than 25% of one’s gross monthly income on vehicle financing, which equates to approximately R6,500.
The South African Reserve Bank’s (SARB) Monetary Policy Committee recently surprised market expectations by increasing the interest rate by 50 basis points – 25 points more than what economists and analysts forecasted. This rate hike is the ninth in the current cycle, with a total adjustment of 425 basis points since November 2021. Rates are now at their highest point in 13 years (June 2009), when the global financial crisis impacted the local currency.
To determine the affordability of vehicles, calculations were made using Wesbank’s repayments calculator, assuming a 0% deposit for car financing and excluding any additional fees incurred during the loan’s inception. The cars are financed over five years (60 months) at an annual interest rate of 11.25% – following the SARB’s rate hike, taking the prime rate from 10.75% to 11.25%.
The most affordable car on the market is the Suzuki S-Presso, with a starting price of R165,900. Financing this car would require a monthly instalment of around R3,723 – close to 14% of the average monthly salary in South Africa. On the other hand, those willing to spend closer to the recommended limit can consider purchasing the VW Polo Vivo hatchback or the Toyota Urban Cruiser crossover SUV, requiring monthly instalments of R5,932 and R6,288, respectively. Financing these vehicles would account for 23% and 24% of the average monthly salary in South Africa.
Affordable Vehicles for South Africa’s Average Income
|Proton Saga 1.6
|Hyundai Grand i10
|Suzuki Vitara Brezza
|VW Polo Vivo
|Toyota Urban Cruiser
These vehicles offer a diverse range of options for South Africans with varying needs and preferences, from compact city cars to family-friendly SUVs. Consumers can make informed decisions by carefully considering their budget, vehicle requirements, and the recommendations by industry experts.
The recent interest rate hike by the SARB may affect potential car buyers’ decisions, but the availability of 26 passenger vehicles within the affordability range demonstrates that there are still plenty of options for those looking to purchase a new car on the average salary in South Africa.
As the automotive market continues to evolve and expand, South Africans can expect even more choices in the future. These options will cater to different budgets and requirements, allowing individuals to find the perfect vehicle that meets their needs without compromising their financial stability.
In conclusion, the current average salary in South Africa allows for a wide variety of passenger vehicles to be within reach for many consumers. From the Suzuki S-Presso to the Toyota Urban Cruiser, there is an option for every need and budget. As the automotive landscape continues to grow and change, South Africans can anticipate an even broader range of vehicles to choose from in the years to come.
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