New vehicle pricing has come into sharp focus over affordability concerns, with car prices becoming more and more expensive. This is especially evident when considering some of the cheapest entry-level cars offered by luxury brands, which now cost well over half a million rand. According to TransUnion’s latest Vehicle Pricing Index (VPI), the price of new vehicles, on average, increased by 6.3% in Q1 2023. This surge in prices, however, doesn’t deter those who seek the prestige and quality of luxury vehicles.
Luxury cars have always symbolized status and success, and this trend holds true in South Africa. These vehicles are renowned for their quality, performance, advanced technology, and superior craftsmanship, making them a symbol of luxury and prestige. In a country where high-quality materials, superior craftsmanship, and advanced technology are highly sought after, owning a luxury car can offer a more enjoyable driving experience.
Price Increases in the Luxury Car Segment
The surge in vehicle prices can be attributed to various factors, including high input costs, load shedding, poor economic conditions, and shortages of key components due to global factors such as the shutdown of China’s economy at the end of 2022. These challenges are not unique to the mainstream automotive market; they also affect luxury brands.
For example, the Mercedes-Benz A-Class, which was priced at R499,000 in 2018, now starts at R794,509. This represents a year-on-year increase of close to R60,000 or a staggering 59% price increase over the past five years.
Luxury Cars: Not for Everyone
Despite the sharp increases in vehicle prices in South Africa, luxury brands like Mercedes-Benz are not targeting the affordability segment. Luxury car brands cater to those who prioritize quality, brand reputation, and a superior driving experience. These cars are often perceived as more reliable and safer than the average vehicle, adhering to rigorous safety standards in their manufacturing processes.
However, it’s always interesting to know the cheapest options among the top luxury brands in South Africa. BusinessTech has explored these models and their current prices, shedding light on which luxury vehicles are (relatively) more accessible to the South African market.
The Cheapest Luxury Cars in South Africa
Audi A1
- Starting price: R463,800
Using Wesbank’s vehicle finance calculator and assuming no deposit, with a 0% balloon payment over five years (60 months) at an interest rate of 11.75%, the estimated monthly repayment for the Audi A1 is approximately R10,354. Industry experts recommend that prospective buyers spend no more than a quarter (25%) of their monthly income on vehicle-related costs. Based on this recommendation, the minimum monthly salary required to afford the Audi A1 is approximately R41,000 per month.
According to the latest World Inequality report, earning around R500,000 per annum puts those who can afford the cheapest vehicle on this list in the top 8% of income earners in the country. To put this in perspective, 92% of the population earns less than this, with the bottom 50% of working adults earning roughly R12,300 a year.
Ferrari 296
- Starting price: R6,804,200
For those with more extravagant tastes, the cheapest Ferrari in South Africa comes with a price tag of R6,804,200. To afford this luxurious sports car, one would need to earn roughly R585,500 per month, firmly placing them in the top 1% of income earners in the country.
The Cheapest Models from Other Luxury Brands
Now, let’s take a closer look at the cheapest models offered by other popular luxury brands in South Africa:
Alfa Romeo – Tonale
- Starting price: R754,900
Bentley – Flying Spur
- Starting price: R4,420,000
BMW – 1 Series
- Starting price: R641,072
Jaguar – E-Pace
- Starting price: R1,132,000
Lamborghini – Urus
- Starting price: R4,550,000
Land Rover – Range Rover Evoque
- Starting price: R1,171,000
Lexus – ES
- Starting price: R794,500
Maserati – Grecale
- Starting price: R1,799,900
Porche – Macan
- Starting price: R1,346,000
Volvo – XC40
- Starting price: R677,700
It’s clear that luxury comes at a price, and these luxury cars are a symbol of exclusivity. While they may not be affordable for everyone, they continue to attract the attention of the top earners in South Africa who value quality, performance, and status.
In conclusion, the South African luxury car market is resilient despite rising prices. Luxury car brands are committed to providing high-quality vehicles, advanced technology, and superior craftsmanship to their discerning customers, even if that means catering to a select few. As the automotive industry faces ongoing challenges, it’s fascinating to see how luxury brands adapt to maintain their reputation in a market that values exclusivity and excellence.