Audi South Africa (SA) says buy-down trends, high inflation and interest rates have placed significant pressure on the domestic premium car market.

The local arm of the German carmaker says these factors have intensified both the affordability pressure on consumers and the pricing pressure on vehicle manufacturers.

“This has prompted buyers to explore alternative options from new brand entrants primarily targeting the price-sensitive volume segment with well-equipped vehicles, despite these brands often having a limited track record, potentially affecting residual values and consumer experience.”

Audi SA says the premium-vehicle sector has contracted to nearly a third of its size compared with a decade ago, with 2024 marking the lowest level yet.

“Compounding these challenges is the absence of a regulatory framework and incentive support scheme by the South African government – such as those available for battery electric vehicles (BEVs) in other industrialised nations – further accelerating these market trajectories.”

In South Africa, Audi SA says the need exists for a comprehensive automotive strategy, as well as decisive action and support from government, to ease the burden on all automotive players invested in the country.

“While the automotive sector is a critical contributor to the South African economy, the industry continues to face hurdles such as slow and inconsistent policy implementation and insufficient infrastructure investment.”

Audi’s head office in Ingolstadt said earlier this year that it was backing down on what was a very aggressive BEV strategy.

Now, as part of its product initiative, Audi will launch new electric models, but also a new generation of combustion engine vehicles and plug-in hybrids.

“We will manage the production of our last combustion engine vehicles depending on the various developments in the world markets,” the company announced in March.

It added that 2025 “will be a very challenging year for us, but we are renewing our product portfolio, and these new offers are now successively reaching the markets”.

Dealerships Affected
In response to the current market changes, Audi SA is “proactively aligning its approach with new market realities and customer expectations”.

“To reinforce its retail presence and ensure long-term partner viability, the company has started to implement an optimised footprint strategy that balances meaningful customer experiences with operational efficiency.”

Audi SA is not prepared to comment on what “an optimised footprint strategy” means exactly for its customers.

The Motor Industry Staff Association, however, says it is aware of four Audi branches closing their doors in Durban, eMalahleni, Pietermaritzburg and on the East Rand.