Chinese cars cause pain for South African companies

Combined Motor Holdings (CMH) reported that local automotive companies are under severe pressure due to the proliferation of Chinese and Indian vehicle imports.

The company warned that, without increased government support, this could lead to job losses.

CMH represents many leading motor vehicle brands in South Africa, including Ford, Jeep, Land Rover, Mahindra, Honda, Mazda, and Nissan. Its car hire services operate through First Car Rental.

In the company’s 2025 Integrated Annual Report, released on Tuesday, 29 April, CMH CEO Jebb McIntosh lamented South Africa’s difficult trading environment.

“Challenges ranged from the zero-growth economy and continued high interest rates to the prolific increases in basic household utilities, such as electricity and water,” he said.

McIntosh said these factors decimated disposable income and, therefore, vehicle affordability, reduced consumer confidence and heightened reluctance to spend on big-ticket items.

Although CMH’s revenue increased 3.2% in its 2025 financial year, trading margins were down at both gross and operating profit levels. 

The company’s operating profit fell from R781.16 million in 2024 to R639.54 million, an 18.13% decline.

McIntosh stated that this was primarily caused by pricing pressure, which was intensified by the influx of low-priced foreign imports and the resulting decline in sales volumes of traditional, locally sourced brands.  

He explained that this affected nearly every part of CMH’s operations, from manufacturing to the car rental business.

At the manufacturer level, he cited the unrestricted proliferation of Chinese and Indian vehicle imports as a significant challenge, saying it placed extreme pressure on local producers.

He warned that many jobs may be lost unless there is more government support for local manufacturers.

CMH’s motor retail and distribution segment reported that national passenger and light commercial vehicle sales decreased marginally from 496,000 to 494,000 during the financial year. 

“Whilst the mild resurgence in the last quarter was encouraging, it was insufficient to rescue the market and lift it to the 2019 pre-COVID level,” McIntosh said. 

“Vehicle finance houses have recorded that few newcomers are being added to the customer base, with only 10 million of 65 million South Africans being able to afford a vehicle, let alone a new one.”

Locally sourced brands under pressure

McIntosh said the “phenomenal entry of importers” makes matters worse for both motor manufacturers and retailers.

These imports mean at least a dozen more players are vying for a share in a market that has not grown in five years.

He specifically highlighted the luxury vehicle sales market, which he said has been hardest hit in recent years and has been in decline for almost a decade. 

Statistics record a 10% fall in sales between 2022 and 2023, followed by a further 8% contraction during 2024. 

“Within the group, several dealerships have undergone costly restructuring and repositioning to take advantage of brand and product changes,” McIntosh said. 

For example, he said Ford is now more focused on the light commercial market, and although it has shown growth in various segments, its scope is more limited. 

Nissan is no longer producing its previously very popular and affordable half-ton and one-ton pickups. 

“Some of its key models sourced from Japan have been discontinued because they are no longer affordable locally,” McIntosh said. 

He added that Volvo’s stated intention to focus on electric and hybrid models has severely hampered its local attraction.

“The dealer network has been cut from 25 dealers to 7, which will operate only in the major metropolitan areas,” he said. 

“The group will operate four of the seven survivors and expects to benefit from a greater share of the workshop and parts sales business.”

McIntosh said the electric and hybrid vehicle markets remain challenging and, without some form of government subsidy or import duty advantage, prices will remain high.

“Nothing more has been heard of government promises made in October last year regarding incentive proposals. Volvo is a significant player in this very small segment.”