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Young South Africans, aged 35 and younger, have demonstrated a growing preference for private mobility. This can be seen in recent WesBank data that shows a consistent increase over the past three years in the number of vehicle finance applications for new and pre-owned cars by Millennials and Gen-Zs.
According to a media statement by Meropa Communications there is an upward trajectory was tracked from 2021 when 722 505 vehicle finance applications were received from young people aged 35 and younger. This number increased to 806 458 in 2022 and 826 088 by 2023.
“This is contrary to previously held views by industry experts who suggested that a desire for private car ownership would wane amongst Millennials and Gen-Zs in favour of alternative forms of transport, such as e-hailing services,” says Lebo Gaoaketse, Head of Marketing and Communication at WesBank.
“Vehicle purchases among this age group have indeed slowed down,” says Gaoaketse, “as reported in 2023 by data analytics firm Lightstone, which noted an eight percent year-on-year decrease in 2012 and 2022 in the number of cars purchased by consumers below the age of 35.”
“Viewed in conjunction with WesBank’s vehicle finance applications data, though, it becomes clear that the subdued sales are not a result of diminished desire for personal cars, but rather a symptom of a depressed economy and strained affordability across all age groups, including Millennials and Gen-Zs,” he says.
To stimulate sales, manufacturers, dealerships and finance houses have ramped up their incentive programmes in recent times by offering discounts, innovative finance structures and extended loan terms to ease the load carried by consumers seeking to purchase a car.
“For recent graduates, for instance, who might not have a credit history, WesBank introduced a Graduate Finance programme, which grants young people access to vehicle finance despite not having a credit record.
“However, more needs to be done to help young South Africans attain their aspiration for safe and reliable private mobility, which in many cases can also be a key consideration for a successful job application,” says Gaoaketse.
“Despite the economic headwinds currently facing most South Africans, sound financial management remains critical for the maintenance of a good credit record, which influences lenders’ propensity to extend credit as well as the interest they charge,” he advises.
“It might also be necessary for those seeking vehicle finance to consider more affordable alternatives in the pre-owned space or among value-oriented importers that have recently entered the local market,” he concludes.
