The South African automotive industry is poised for a significant shift in 2024, driven by the increasing popularity of car subscription and leasing services. These models offer innovative alternatives to traditional car ownership, providing consumers with flexibility and convenience. Unlike traditional methods that require paying cash or obtaining a loan, leasing allows consumers to drive a new vehicle every few years without the hassle of selling it.
Car subscriptions take this further by bundling insurance and maintenance costs into a single monthly fee. According to AutoTrader CEO George Mienie, these financial models cater to consumers seeking adaptable lifestyles and businesses looking to reduce fleet costs, potentially disrupting traditional purchasing and financing structures.
Expanding Accessibility for Subprime Consumers
Leasing and subscription models are not only convenient but also make vehicle ownership more accessible to subprime consumers who might struggle with traditional financing. This inclusion helps these individuals become more productive members of the economy.
Companies like Toyota’s Kinto One and Avis’ iLease are leading the way in providing these services. Since its launch in mid-2022, Kinto One has seen over 2,000 vehicles on South African roads, with 90% of these subscriptions coming from small and medium enterprises, highlighting the growing demand for flexible and hassle-free mobility solutions.
Boom in Online Car Shopping
2024 is expected to see a surge in online car shopping in South Africa as consumers increasingly prioritize convenience, efficiency, and safety. AutoTrader reports a 97% increase in annual visits to its website since 2019, with continued growth into 2024. Consumers are now more comfortable researching, comparing, and purchasing vehicles from the comfort of their homes. In response, dealerships are enhancing their online presence, offering virtual tours, online negotiations, and home delivery services.
This trend is likely to accelerate with improvements in digital infrastructure and increased consumer trust in online transactions.
Growth of Hybrid and Electric Vehicles
Another significant trend is the rise of hybrid (HEV) and electric vehicles (EV) on South African roads. The declining prices of HEVs and EVs, driven by advancements in battery technology and increased availability, are encouraging more motorists to adopt these eco-friendly options.
Additionally, there is a growing emphasis on sustainability in vehicle production, with South African manufacturers accelerating green practices and decarbonization efforts. This shift will likely impact the vehicle servicing industry, requiring companies to adapt and upskill their workers to meet the different maintenance needs of HEVs and EVs.
Increasing Reliance on Shared Mobility
Shared mobility is set to become more prevalent in South Africa in 2024. Ride-hailing apps like Uber and Bolt, along with car-sharing platforms such as Mini Sharing, offer convenient and cost-effective alternatives to car ownership. As urbanization increases, these services provide practical solutions for city dwellers, opening new opportunities for automotive companies to diversify their offerings.
Customization and Personalization in the Premium Segment
Lastly, customization and personalization are expected to be major themes in the South African automotive industry, especially in the premium segment. Advanced manufacturing technologies, such as 3D printing, enable automotive companies to offer more personalized options and features, catering to consumers' desire for unique driving experiences.
