The popularity of Chinese brands is influencing pricing decisions, buyer behaviour and the resale value of traditional German and European cars.
The imports, which have already flexed their muscle in the new vehicles segments, are now stretching their influence into the bigger second-hand car market.
WeBuyCars, SA’s largest secondhand car showroom, on Monday told Business Day that this structural change was changing the landscape of the used-car industry.
WeBuyCars chief strategy officer Willem Klopper said Chinese makes such as Haval, Chery and GWM — which entered the country years before newer brands like Jaecoo, Omoda and BYD — were already strong performers on dealers’ floors.
These models are holding their value and are also selling faster than many competitors.
But because new Chinese cars are priced so competitively, often with favourable finance deals, many consumers are choosing a new Chinese vehicle instead of used cars.
This has forced WeBuyCars to adjust how much it pays for ageing premium brands such as BMW and Mercedes-Benz, which now remain longer in the market and have weaker resale values.
Klopper said the company’s algorithms now price these traditional brands much lower than three or four years ago to avoid being stuck with slow-moving stock.
“Those vehicles are standing longer because they’re competing with the Asian brands,” he said.
The group said it had to adjust prices as it faced margin pressure due to structural shifts in the market that have seen consumers pivot to competitively priced and technologically advanced Chinese brands.
“WeBuyCars experienced margin pressure resulting from structural shifts within the SA automotive industry. The continued strength of the new vehicle market, with the rapid rise of competitively priced Chinese brands including GWM, Chery, Omoda, Jaecoo, Jetour, MG, JAC and BAIC, have significantly influenced consumer behaviour and heightened competition,” the company said.
“These brands have captured notable market share through attractive pricing and compelling new-vehicle offerings,” WeBuyCars said.
“To maintain liquidity and ensure healthy inventory turns, WeBuyCars adjusted selling prices on vehicles competing within these price brackets. This proactive measure placed short-term pressure on margins during the second half of the year.”
Despite these pressures, the group reported a 13.1% increase in group revenue to R26.4bn in the year ended September. This helped the company report a 15% hike in core headline earnings to R937.6m.
The company, which was listed on the JSE last year, continued to gain market share, reporting a record 16,294 monthly units sold in November 2024.
The group, founded by brothers Faan and Dirk van der Walt in 2021, said monthly sales volumes exceeded 15,000 units in six of the last 12 months — still a mile from the group’s target of buying and selling 23,000 vehicles per month by 2028.
It said despite the margin pressure, the popularity of the Asian car brands would ultimately benefit the group.
“The buoyant new vehicle market and the growing penetration of Asian brands are expected to have a positive long-term impact for WeBuyCars, as these vehicles will enter the used-vehicle market in the future. This will expand the group’s acquisition base and opportunity set.”
Business Day reported in October that Combined Motor Holdings (CMH) said almost half of its new vehicle sales were Chinese and Indian brands, which had displaced traditional marques for SA consumers.
The surge in Chinese and Indian brands helped CMH’s motor retail and distribution unit report a more than two-fold increase in pre-tax profit in the six months ended in August.
CMH said the Asian brands had placed enormous pressure on the group’s traditional favorites — Nissan, Ford and Volvo — “which now struggle to match their pricing and feature-rich offerings”.
Motus, SA’s leading nonmanufacturing motor group with more than 300 dealerships, conceded last month that it had been slow in introducing Chinese brands that have proven popular with cash-strapped consumers.
The popularity of the Chinese brands in SA has seen calls grow for the government to force them to be produced locally.
Siyabonga Mthembu, vehicle sector leader at BDO SA, said SA’s vehicle sector faced competitive and survival headwinds in achieving sustainable growth.
“The sector now faces an onslaught from imports of Chinese and Indian vehicle models. Chinese manufacturers are expanding their presence in SA with aggressive pricing strategies and offering latest technologies through electric vehicles (EVs), which will further disrupt the market,” Mthembu said in a note to clients.
“While this is good for the price-conscious consumer, established brands will face an uphill battle to protect their market share. This requires them to adapt, offer more innovative features and competitive pricing to retain market share.
“Unsurprising, there is an outcry from local manufacturers who are calling for the government to do something about imported vehicles, as they say this is creating an uneven competitive landscape.”
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