Haval and Chery winning in South Africa 

Chinese car brands are surging in popularity across South Africa as many motorists turn away from expensive German brands to cheaper alternatives. 

South African consumers have been under immense pressure from the rising cost of living and a lack of economic growth. 

Elevated interest rates have also made it increasingly difficult to afford new cars, with many buyers being priced out. 

This has kickstarted a trend of South Africans not only buying new cars less frequently but also buying down to save money. Instead of upgrading to the latest BMW, Mercedes, or Audi, many are looking for cheaper alternatives. 

The latest company to flag this trend is Standard Bank in its vehicle financing data, following on from Nedbank’s MFC division. 

Despite overall retail sales facing pressure, the number of Chinese cars financed by Standard Bank Vehicle Finance has consistently increased year-on-year since 2022. 

Standard Bank’s sales data shows that the proportion of Chinese car brands increased from just over 6% in 2022 to 7.4% in the first half of 2024. 

Head of Automotive Retail at Standard Bank Vehicle and Asset Finance, Derick De Vries, said this growth is especially notable when considering the broader decline in new vehicle sales in the country.

“Even though Chinese brands currently represent less than 10% of our retail sales, their upward trajectory is remarkable given the challenging market conditions,” he said.

The Automotive Business Council’s quarterly reviews confirm that year-on-year new vehicle sales have been declining since the third quarter of 2023. 

In the second quarter of 2024, new vehicle sales dropped by 9.6% compared to the corresponding quarter in 2023. 

During this same period, Standard Bank Vehicle Finance financed more new Chinese car brands, with GWM Haval being the most popular Chinese brand financed since 2022, followed by Chery and BAIC.

These cars are particularly popular in Gauteng, where Standard Bank concluded 54% of Chinese car brand deals. KwaZulu Natal and Western Cape also contribute to their growing presence, with 18% and 10% of deals, respectively. 

Furthermore, the used car market for Chinese brands is expanding. The proportion of used Chinese car brands financed by the bank increased from 20% in 2022 to 36% in July 2024. 

The growing popularity of used cars is evident across the market, with pre-owned cars accounting for 70% of Standard Bank VAF’s sales year-to-date compared to 62% in 2022.

De Vries says these brands are clearly gaining significant traction, reflecting the broader global trend where Chinese vehicles are taking more market share, driven by competitive pricing and growing consumer confidence.

“We are seeing a notable shift in the South African automotive market because of the popularity of Chinese car brands. We constantly see GWM brands in the top ten of Naamsa’s Vehicle Sales by Manufacturer list,” he said.

South Africa’s largest financier of vehicles, Nedbank’s MFC, also flagged the rapid growth of Chinese cars in its latest update on the automotive industry. 

MFC expects around 20% of all new car sales to be Chinese brands next year, saying these cars are reshaping the entire industry with their competitive pricing. 

It also said these brands are not only competing in the cheaper end of the market but are taking on all comers across nearly every market segment, from luxury SUVs to electric vehicles and hatchbacks. 

MFC said the major attraction of Chinese vehicles is their competitive pricing. They offer high-quality vehicles at lower prices than traditional Western and Japanese brands. 

While Chinese brands are also very affordable, they are often also competitive in terms of technology and luxury. 

Many incorporate advanced features into their vehicles, such as autonomous driving capabilities, connectivity, and enhanced safety features. 

AutoTrader has also picked up on this trend, albeit to a smaller extent, within the used car market in South Africa. The company said it has noticed a sizeable uptick in searches for Chinese brands on its platform.

This trend has occurred simultaneously with a shift away from German luxury brands such as BMW, Mercedes, and Audi.

In its Mid-Year Car Industry Report, AutoTrader noted that it does not expect this to end any time soon and expects interest in cheaper alternatives to pick up. 

Whether it be a shift from buying a new car to a used vehicle or buying down, luxury vehicle sales will remain under pressure for the foreseeable future. 

MFC expects Chinese brands to continue to continue to grow in South Africa as they release more models and expand their dealership networks. 

However, it warned that these brands still face an uphill battle in building trust in their vehicles. Chinese companies simply have to overcome perceptions of low build quality. 

MFC also said they need to invest heavily in after-sales services and customer support as they lag competitors in this area.