Affordability drives structural shift towards SUVs

Affordability is driving a structural shift among South African consumers towards sport utility vehicles (SUVs), while the US-Iran conflict is accelerating the uptake of new energy vehicles (NEVs) as higher fuel prices put pressure on household budgets.

Charl Potgieter, managing executive at Absa Vehicle and Asset Finance, told DealerCon on Thursday that an analysis of 2.56 million finance applications that it processed between January 2023 and June 2026, with a particular focus on bakkies, body-on-frame SUVs and SUVs, revealed how customer choices are changing.

Potgieter said SUVs increased their share of the combined SUV, bakkie and body-on-frame SUV market from 60.2% in the second quarter of 2023 to 67.6% in the second quarter of 2026.

Read: Affordable Chinese brands help drive SA’s NEV transition

He said SUV applications grew by 38% between 2023 and 2025, while bakkie and body-on-frame SUV volumes remained relatively stable.

By the second quarter of 2026, bakkies accounted for 28.9% of the three segments analysed, compared with 36.3% three years earlier, while body-on-frame SUV finance applications declined to 3.6% from 5%.

Potgieter said the growth in SUVs has been supported by relatively stable pricing, with the average SUV finance application value increasing by only 0.6%, from about R350 000 to R353 000 over the period.

By comparison, the average bakkie finance application value rose by almost 20%, from about R375 000 to R448 000, while body-on-frame SUVs increased by 14% to about R564 000.

Chinese brands reshape market

Potgieter said Chinese vehicle brands have played a significant role in this shift, increasing their share of SUV finance applications from 19% in 2023 to 40% in 2026.

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He said the growing presence of Chinese brands has introduced greater competition and helped maintain accessible pricing in the SUV category.

Chinese brands have also more than doubled their share of bakkie finance applications, from 4.4% to 11.2%, although established manufacturers continue to lead the segment.

“South African consumers are increasingly assessing the overall value offered by a vehicle, including price, features and suitability for their lifestyle.

“Greater competition in the SUV segment is giving customers more choice at accessible price points and is changing the composition of the market,” he said.

Potgieter added that while overall bakkie volumes have remained relatively stable, the composition of the segment is changing.

He said double cabs now account for 65% of bakkie finance applications, compared with 58% in 2023, reinforcing their position as the dominant bakkie configuration.

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At the same time, the share of half-ton bakkies has declined from about 15% to 7%.

Potgieter said customer transaction data indicates that former half-ton owners generally did not move to larger bakkies. Instead, 49% moved outside the bakkie and SUV categories, with hatchbacks becoming the most common next purchase.

He believes there is an important lesson in this.

“When the vehicle a customer would ideally choose moves beyond what they can comfortably afford, they do not always stretch their budget. Quite often, they rethink what they need.

“So the customer journey is becoming much less predictable than the traditional categories on our showroom floors might suggest.

“People are moving between segments as their circumstances change. They are weighing lifestyle against practicality, capability against price, and brand preference against value.”

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Strongest customer retention

Potgieter said SUVs recorded the strongest customer retention across the broader market, with 55% of existing SUV customers purchasing another SUV.

Bakkie retention stood at 45%, while body-on-frame SUV customers were more evenly split between buying another body-on-frame SUV, moving to a bakkie or switching to an SUV.

Potgieter stressed that, for dealers, manufacturers and financiers, understanding the customer cannot stop with knowing what vehicle they drove in with.

They need to understand what customers need next and what might cause them to make a very different choice.

Fuel prices boost interest in EVs

In a reference to the impact of the US-Iran conflict on oil prices, Alan Quinn, chief product and innovation officer at Cars.co.za, said he did not want to understate the significance of this year, given that electric vehicles (EVs) are being discussed and considered more than ever before.

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High cost of fuel versus cheaper electric vehicles …

Quinn said he is old enough to remember the oil shock caused by Opec in the 1970s, which resulted in brands such as Toyota and Nissan emerging after the shock because they offered reliable, economical vehicles at good price points.

“Does that not feel familiar to today?

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“We have had a shock. It wakes people up. They start to think and start to think differently. I think we will look back on this year as the year when hybrids and EVs took off.”

Quinn said an EV is a practical solution to a practical problem for many people because the running costs of vehicles “has caused an awful lot of angst”.

Potgieter said NEVs are beginning to establish themselves in South Africa, representing another market shift that cannot be ignored.

Read:

Affordable electric vehicles gain traction as petrol costs bite

He said NEVs accounted for about 1.3% of the market in 2022, but this had risen to more than 5% in 2026, with 9 703 units recorded in the first half of the year.

Potgieter said average EV prices have also fallen substantially, from around R1.2 million in 2020 to about R712 000. Chinese brands now account for about 60% of the NEV segment.

He said the data shows that the current NEV buyer is not predominantly the youngest consumer, but an older one, with Generation X significantly overrepresented relative to the broader internal combustion market. They are also much more likely to purchase new vehicles.

Chinese brands gain ground

Cars.co.za launched its Motor Industry Report 2026 at DealerCon.

Key findings from the report include:

Chinese manufacturers grew sales by 72% year on year in the second quarter of 2026, compared with 3% for traditional manufacturers. Their combined market share is now about 22%.
Chinese brands account for 40% of SUV finance applications, according to Absa, up from 19% in 2023.
Shoppers are prioritising price (70.8%) and fuel efficiency (52.5%) when choosing a vehicle.
The traditional Big Four – Ford, Toyota, Nissan and Isuzu – saw their combined finance application share fall from 84% to 75% over three years, largely because of the decline in Nissan’s market share.

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