Vehicle industry sees record growth as Drive Motor Index soars by 7.4%

Drive.co.za has released the Q3 2025 findings of the Drive Motor Index (DMI), which shows continued year-on-year growth of 7.4%, reaching a new record high. The index is now above pre-Covid-19 levels.

Source: Freepik

Compiled by economist Dr Roelof Botha, the DMI is a composite index measuring twelve key indicators of South Africa’s motor sector, including vehicle manufacturing, sales, exports, and related metrics. Indicators are weighted to reflect their importance in assessing overall sector performance.

Drive.co.za developed the DMI to provide a reliable, time-series gauge of business conditions in the motor sector, which contributes significantly to GDP and supports an estimated 580,000 jobs. The sector includes vehicle manufacturing, retail, servicing, repairs, and related facilities.

Factors driving growth

Following a period of record-high interest rates, the first rate cut in September 2024 triggered an upward trend in most key indicators. Five subsequent 25-basis-point cuts lowered the prime rate to 10.5% by September 2025, with another cut anticipated in Q4 2025.

Lower financing costs, coupled with a rise in imports of affordable vehicles from China, stimulated buying activity, particularly in new vehicle sales.
Strong performance across multiple indicators

Nine of the twelve DMI indicators recorded positive year-on-year growth, including major drivers such as new vehicle sales and the number of vehicles sold. Vehicle and component exports, along with used vehicle sales, also posted quarter-on-quarter growth.

While the sector’s recovery is still in its early stages—impacted by Covid-19 lockdowns and high interest rates—the DMI has outperformed South Africa’s real GDP growth since 2018.

Record local sales and exports

Local vehicle sales hit a record high in Q3 2025, rebounding to pre-Covid levels due to pent-up demand and lower interest rates. Exports of vehicles and components also reached a record value, remaining the third-largest contributor to South Africa’s goods export earnings.

Key macroeconomic contributions of South Africa’s automotive industry include:

• 4.9% of GDP (2.9% manufacturing, 2% retail)
• ~R130bn invested by domestic OEMs since 1994
• Largest manufacturing sector: 17.7% of factory output (R537bn in 2023)
• Vehicle & component exports: R240bn in 2023, the third-largest source of foreign exchange

Outlook

The DMI indicates a strong upward trajectory, but policymakers must remain vigilant to protect jobs and maintain global competitiveness in South Africa’s automotive sector.