Chinese cars flooding into South Africa with trouble brewing
Chinese cars are flooding into South Africa’s automotive market, and traditional brands, particularly luxury brands, are struggling to compete.
However, Chinese brands are beginning to eat into each other’s market share, and newer brands are struggling to gain traction as the market appears saturated.
This is feedback from one of South Africa’s largest automotive companies, Combined Motor Holdings (CMH), which released its interim results for the six months to the end of August.
The company’s new vehicle unit sales fell 8%, which was in line with the national market for passenger and light commercial vehicles.
Both CMH and the country suffered during the election period, with elevated uncertainty resulting in many consumers not spending on big-ticket items.
“In addition, tough competition, particularly with respect to new Chinese entrants to an already saturated local market, has created intense trading margin pressure,” CMH said.
The traditional brands, with local manufacturing investments, are struggling to compete against the flood of cheaper import alternatives.
CMH said that imports from India and China already make up 50% of all vehicles the company imports and that over 25% of the new car markets are expected to be taken up by Chinese brands next year.
CEO Jebb McIntosh previously said this is the result of billions of dollars being spent by manufacturers to shif their production to India and China.
However, the company does remain well-positioned to benefit from the rapid growth of Chinese and Indian cars in South Africa through its ownership of Mandarin Parts Distributors.
This division imports parts for Chinese cars, and as their popularity grows, demand for spare parts is expected to increase.
CMH did say this division has been affected by disruptions and inefficiencies at South Africa’s ports.

The rise of Chinese cars has been well documented, with sales of Chery and Haval vehicles skyrocketing in recent years.
Haval’s sales have surged from 428 vehicles in 2014 to 14,265 in 2023. It now sells 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 success of these two brands has resulted in other Chinese brands launching in South Africa, looking to emulate the strong growth of Chery and Haval.
However, while the growth in sales of Chinese cars has been strong, it may have hit a ceiling due to the stagnant local economy and lacklustre demand for new cars.
CMH noted in a presentation to analysts earlier this year that sales of Chery vehicles continue to be strong, growing their market share by 50%.
However, Haval’s market share had declined by 11%. CMH said it had lost market share to Chery in the year to May.
This indicates that the rapid growth of Chinese brands within a stagnant market has resulted in them eating into each others’ market share.
While Chery and Haval are big enough to survive swings in market share, newer Chinese brands do not have that luxury.
In its interim results, CMH noted that its sales of newer brands have struggled, pushing many to resort to lowering prices to compete and clear inventory.
Other Asian companies, such as Malaysia’s Proton, have looked to enter the South African market. CMH said this brand has “struggled gamely”, and prices have been driven down to generate interest in it.
South Africa’s largest financier of vehicles, Nedbank’s 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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