As Beijing Auto Show unveilings clutter social media feeds, a five-year comparison of South Africa’s car sales shows the steady growth of Chinese brands.
In March 2021 Haval Motors SA, now under the Great Wall Motors (GWM) SA banner, was the single brand from China on the country’s top 10 list of new vehicle sales. During the same period this year, the list included the likes of Chery Auto SA and Jetour SA — an arm of Chery operating independently in the local market.
Omoda & Jaecoo SA also operates independently, though these two brands are subsidiary brands of Chery international.
If the sales for Chery, Jetour, Omoda & Jaecoo were combined, the total of 5,591 units would have made the Chinese group South Africa’s second-biggest car brand, behind Toyota but ahead of VW Group SA, which sold 5,574 cars last month — a figure including the premium division Audi.
China’s automotive sector has undergone rapid industrial scaling supported by co-ordinated state policy, deep supply chain integration and early leadership in new energy vehicles.
— Paulina Mamogobo, chief economist at Naamsa,
The chief economist at the automotive business council Naamsa, Paulina Mamogobo, said the rise of competitively priced Chinese brands in South Africa reflected a confluence of global and domestic factors.
“China’s automotive sector has undergone rapid industrial scaling supported by co-ordinated state policy, deep supply chain integration and early leadership in new energy vehicles [NEVs]. This has enabled manufacturers to achieve cost efficiencies across batteries, components and final assembly,” she said.
“Chinese manufacturers have adopted a ‘feature-rich at entry-level price’ strategy. In a market like South Africa, where real disposable incomes have been under pressure and interest rates elevated, this value proposition appears to resonate with price-sensitive consumers.”
Chery SA spokesperson Verene Petersen said different positioning dictated the separate local operations of the Chery, Jetour and Omoda & Jaecoo brands.
She added that the independence of the marques “opens up network availability to different brand streams and allows for all investors, not only traditional dealer groups, to have access”.
According to Petersen, Chery vehicles’ designs, standard features and warranty offerings allowed the brand to gain traction in the post-pandemic market.
Although Chery recently acquired Nissan’s former plant in Rosslyn, it is yet to officially announce a timeline for its production plans.
Nissan held third place in March 2021 with 4,096 units sold, but last month that position was occupied by Suzuki SA with 5,047, while Nissan was in 13th place with 1,487.
GWM SA executives revealed in March that the company plans to build cars locally and has considered the Mercedes-Benz plant in East London.
The market for premium brands such as Audi, BMW and Mercedes-Benz has contracted sharply.
Speaking at a recent briefing, Audi executives remarked on the total premium market’s 2013 high, which accounted for as many as 90,000 vehicles, with Audi holding a 24% share and selling around 20,000 units annually.
Now, with the total premium market reduced to about 32,000 cars, its target of 20% represents 6,500 units. Adjusting to the reduced volume meant rationalising its dealer network.
Audi’s parent company, Volkswagen Group Africa, has also seen its share eroding. Though it remained South Africa’s second-best-selling car brand in March, Suzuki is on its heels and beat the German firm for second place in January.
In March 2021 Volkswagen reported 6,301 sales — 727 fewer than it managed in the same month this year.
Established brands still hold significant advantages: brand equity, extensive dealer networks, aftersales infrastructure and deep local manufacturing footprints — these are not easily displaced
— Mamogobo
At the brand’s annual briefing in Kariega this year, MD Martina Biene said rising manufacturing costs and government policy uncertainty were speedbumps for automakers that produce locally.
VW has been building cars in South Africa since 1951.
Biene said it was difficult to compete with brands like Suzuki on price, as the Japanese company imports the majority of its range from India, where labour costs are said to be as much as 50% lower.
Market leader Toyota has managed to stave off competition, increasing its share from 10,797 units in March 2021 to 13,323 last month.
Mamogobo said it would be premature to conclude that legacy car brands are in irreversible decline.
“Established brands still hold significant advantages: brand equity, extensive dealer networks, aftersales infrastructure and deep local manufacturing footprints — these are not easily displaced.”
However, she said consumers’ loyalties had changed, with buyers willing to experiment with newer brands as price sensitivity increases. She anticipates that increased competition from emerging brands will continue.
“South Africa remains one of the most sophisticated and open automotive markets on the continent, supported by relatively well-developed financing channels and diverse consumer demand.
“In 2024 there were no less than 50 passenger car brands and 2,203 model derivatives available in the market, representing one of the highest brand-to-market-size ratios globally.
“This breadth of choice reflects both the attractiveness and relative openness of the South African market; at the same time, the domestic market size — while significant by regional standards — does not expand indefinitely. As more brands enter, competitive dynamics will determine the trading environment.”
Business Times
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