Three car brands taking over South Africa
Suzuki, Haval, and Chery have rapidly grown their sales numbers in South Africa as motorists increasingly search for value amid elevated interest rates and a rising cost of living.
South Africa’s automotive industry has undergone a significant shift in recent years as traditional luxury brands come under pressure from new competitors out of Asia.
The shift has been so significant it has impacted the financial performance of JSE-listed companies, with Motus coming under pressure and Combined Motor Holdings seemingly benefitting.
Suzuki is a standout performer amid a trend of motorists buying down. The Japanese brand’s sales have skyrocketed over the past decade.
In 2014, Suzuki sold a mere 6,402 cars throughout the year. Now, it nearly sells the same number of cars in a month, with its monthly figures peaking at 5,235 vehicles in January this year.
This trend has particularly accelerated in the past five years, with Suzuki’s sales rising more than 300%.
Its growth has been so strong that it toppled VW Group as the number two most-sold brand in April this year.
While Suzuki’s grip on second place was shortlived and excluded VW’s sales of commercial vehicles, it remains a consistent third.
Its sales growth shows no signs of slowing down, with almost the same number of cars sold in the first nine months of 2024 than in the full 2023.
Suzuki’s growth has only been rivalled by Chinese giants Haval and Chery, which have gone from strength to strength in the past five years.
Haval has seen its sales numbers surge from 428 vehicles in 2014 to 14,265 in 2023. It now seels over 1,500 cars a month in South Africa.
Since re-entering the South African market in 2022, Chery’s sales have doubled from 8,013 vehicles to over 16,000. It, too, now sells over 1,500 cars a month in the country.
The graph below shows the exceptional growth of these three brands in South Africa over the past decade, with 2024’s figures reflecting sales until the end of September.
The buying-down trend in South Africa’s automotive market is nothing new; it has steadily gained momentum over the past five years.
Combined Motor Holdings (CMH) CEO Jebb McIntosh said this trend has been well-known to automotive companies, with many billions of dollars being spent on shifting manufacturing to India and China.
Access to cheap, abundant labour and lower material costs in these countries has enabled some brands to take market share from companies with historic manufacturing facilities in Europe or the US.
McIntosh said 50% of all vehicles imported by the group come from India or China and over 25% of the new car sales market is expected to be taken up by Chinese brands next year.
While the link between cheap Chinese manufacturing and the increased value of brands such as Haval and Chery is clear, it is less known how Suzuki has managed to benefit while its Japanese and South Korean peers, such as Honda and Kia, have struggled.
Suzuki identified the global shift to cheaper vehicles far earlier than its peers and began taking advantage of cheap manufacturing in India.
It began leveraging its scale in the country to manufacture huge volumes of budget-friendly compact vehicles.
Today, as many as 14 of the 15 nameplates in Suzuki South Africa’s broader stable are imported from India.
The only model sourced from Europe is the Vitara, while the Suzuki Swift Sport derivative is imported from Japan along with the three-door Jimny.
This has enabled Suzuki to avoid having to pass on rising manufacturing costs to its consumers and keep its vehicles attractively priced.
Its range currently runs from R174,900 to R542,900, compared with VW’s range of R259,400 and R1,723,800, excluding Audi.
Chinese brands Haval and Chery have benefitted from similar tailwinds to Suzuki, leveraging its scale in its home market to cheaply manufacture vehicles.
South Africa’s largest financier of vehicles, Nedbank’s MFC division, expects 20% of all new car sales to be from Chinese brands in 2025. It said these brands are reshaping the entire industry with their competitive pricing.
Crucially, they have worked hard to dispel fears of lower quality that comes with cheaper vehicles.
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 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.
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.
MFC also said they need to invest heavily in after-sales services and customer support as they lag competitors in this area.
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