The first two months of 2026 have delivered a sobering message to the Mauritian automotive industry. With just 5,175 vehicles registered between January and February, the market has retreated by 20% compared to the same period in 2025, when 6,480 vehicles were on the books. Against a backdrop of sweeping fiscal reforms introduced in the 2025/2026 national budget, this sharp contraction is not entirely surprising. But understanding what lies behind it, and where the market goes from here, matters for everyone from dealers and importers to everyday Mauritians planning their next purchase.

A Market That Had Been Flying High

To appreciate the scale of this slowdown, it helps to look at where the market has come from. For the fourth consecutive year, new car sales in Mauritius reached a new record in 2025, hitting 18,082 units, up 5.6% year-on-year. Before that, the market soared 16.5% in 2023 to a record 14,295 units, beating the previous record of 12,271 established just the year before. Mauritius had been on an almost uninterrupted upward trajectory through the post-pandemic years, fuelled by rising disposable incomes, competitive financing, and strong consumer appetite.

The January and February figures from 2025 themselves reflected that confidence, with 6,480 registrations across the two months setting a strong opening pace. New vehicle sales shot up by 21.5% year-on-year over the first quarter of 2025, with Suzuki tightening its grip on the market to a remarkable 28.4% share. That makes the opening months of 2026 feel all the more like a handbrake turn.

The Budget That Changed Everything

The catalyst is not hard to identify. The 2025/2026 national budget introduced some of the most significant changes to vehicle taxation in recent memory. Excise and customs duties on imported petrol and diesel passenger vehicles were increased to 100%, replacing the previous rate of 45%, while registration fees for new vehicles rose by 30%.

The changes extended to greener vehicles too. The Rs 200,000 Negative Excise Duty Scheme for electric vehicles was removed from 30 June 2025, making EVs considerably more expensive overnight. The 50% discount on Motor Vehicle Licence fees for electric and hybrid vehicles was also abolished. Non-plug-in hybrids now face excise duties ranging from 25% to 75% depending on engine capacity, while plug-in hybrids incur rates between 15% and 55%.

The stated rationale was to ease road congestion and reduce Mauritius's trade deficit, both genuine concerns on an island now carrying 751,789 registered vehicles on its roads. But policies designed to cool vehicle uptake have done exactly that, and the early 2026 figures are the first clear statistical evidence of their impact.

The Pre-Budget Rush and What Followed

It is worth noting briefly that the budget announcement triggered a well-documented surge in mid-2025, as buyers and dealers rushed to finalise transactions ahead of the new measures. June 2025 stands out sharply in the data, with 4,401 new vehicles registered, almost double May's figures. Much of the demand that would naturally have fallen in early 2026 was effectively pulled forward into that window, which makes the current slowdown partly a tale of borrowed time catching up with the market.

Why Buyers Are Holding Back

Beyond timing, cars have simply become meaningfully more expensive. A conventional petrol vehicle that once attracted 45% in combined excise and customs duty now faces 100%. A buyer purchasing an electric vehicle priced at Rs 2,000,000 now faces an excise duty bill of around Rs 300,000 with no rebate to offset it, representing a total cost increase in the region of Rs 500,000 compared to what was available just a year ago. That is a significant sum for most households.

Mrinal Teeluck, Secretary-General of the Motor Vehicle Dealers Association, described the budget measures as a heavy blow for vehicle importers, expressing concern over the investments made in infrastructure, staff, and equipment in recent years, all of which now face uncertain prospects.

There is also the psychological effect of uncertainty. When fiscal rules change dramatically in a short space of time, consumers tend to adopt a wait-and-see posture, asking whether further policy shifts might follow or whether now is simply the right moment to make a major financial commitment.

The Second-Hand Market: A Silver Lining

Not every corner of the automotive landscape is struggling. Registration fees on the sale or transfer of second-hand domestic vehicles were abolished under the new budget framework, providing a meaningful incentive for buyers who still need a vehicle but are reluctant to absorb the full cost of a new import. The used car segment is likely to see sustained, and perhaps growing, activity through 2026 as a direct result.

For those weighing up their options between new and used, AutoCloud.mu is a particularly useful resource right now. With new vehicle costs elevated, having a single platform to browse verified listings across both categories, compare prices, and access financing tools saves considerable time and guesswork. AutoCloud's market data has tracked these registration shifts closely, offering a clear and current picture of what is available across the island.

What the Road Ahead Looks Like

The most likely scenario for the remainder of 2026 is a period of subdued but gradually stabilising registrations. The duty shock will begin to be absorbed as dealers, importers, and consumers all adjust. Structurally, the long-term case for the market remains intact, with the passenger car segment projected to show annual growth through to 2029 and SUVs expected to remain the dominant category. The direction of travel has not changed; only the pace has.

The one outstanding question is electric vehicles. The reintroduction of taxes on EVs and hybrids is expected to slow the shift toward greener transport, and whether the government revisits those incentives in a future budget will shape the market's longer-term composition considerably.

A Moment to Pause, Not Panic

Four consecutive record years meant some normalisation was always coming. The budget accelerated it. With 751,789 vehicles on Mauritian roads and personal mobility as deeply embedded as ever, demand will return. The question is simply one of timing.

In the meantime, whether you are actively buying, selling, or just keeping a close eye on the market, AutoCloud is the best place to stay across current listings, pricing, and financing options as the picture continues to evolve through 2026.