Two Chinese car brands are taking over South Africa

Chery and Haval have shown strong growth in South Africa in the past decade, with their combined sales rising from 1,725 in 2014 to 31,897 in 2024. 

Their growth has mainly occurred in the past five years, as South Africans have come under increasing financial pressure and are looking for cheaper options. 

This has resulted in a substantial shift in South Africa’s automotive industry as traditional German luxury brands such as BMW, Mercedes-Benz, and Audi come under pressure from Asian competitors. 

The Chinese brands are also not just cheap but offer high-quality vehicles at significantly lower prices. 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. 

Norman Lamprecht, head of trade and research at Naamsa, told Daily Investor that Chinese brands have leveraged the search for value to grow so quickly in South Africa. 

Lamprecht explained that South African motorists already benefit from the most choices compared to the automotive market size in the entire world. 

In 2023, there were 46 passenger car brands with 2,172 model derivatives to choose from in South Africa.  

In the past few years, competition has been fierce with affordability being the main driver behind new vehicle sales and luxury brands coming under pressure across the board. 

 66.3% of vehicles sold in SA in 2023 were below the R500,000 price range, naamsa data shows. 

“The Chinese importers mainly compete in the SUV segment with affordable models, which is a growing segment globally and in South Africa,” Lamprecht said.

They are increasingly entering other market segments, launching hatchbacks and electric vehicles to complement their SUV offerings. 

The two most dominant Chinese players in South Africa, Haval and Chery, have experienced significant sales growth in the past ten years. 

This growth is shown in the graph below. Their sales so far in 2024 have already outpaced their total sales for 2023. 

Lamprecht said this has been driven by China’s strong focus on exporting its vehicles from the mainland, leveraging its manufacturing base and cheap labour to eat up market share. 

China exported around five million vehicles in 2023 and is only set to grow further as they can offer high-quality vehicles at prices no one can match. 

The Chinese have also shown themselves to be capable of becoming an export hub for vehicles, with Western brands producing an increasing number of their models from the country. 

While China is growing rapidly in the automotive world, it is still struggling to displace India as the go-to country for the cheap manufacturing of vehicles. 

On the South African import side, most vehicles, 53.2%, have been imported from India in 2023 with 13.3% from China in second place, Lamprecht said. 

Imports from India consist of small and entry-level vehicles as the country has been established as the global hub by various brands for these segments. 

This has largely been driven by Suzuki, which shifted a large part of its manufacturing to India years ago to take advantage of cheaper costs. 

It has leveraged 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.

Chinese imports by an increasing number of new entrants are mainly SUVs which represent a growth segment globally and in South Africa. 

Lamprecht also noted that while affordability has been a major factor in new car sales, brand loyalty also plays a role as seen with Toyota and VW remaining dominant in the country. 

He also flagged the issue with after-sales support regarding Chinese vehicles in South Africa and expects established players to benefit from this until new entrants build out their dealer network. 

The established brands in the country are responding to the import disruption by way of aggressive marketing, sales incentives, innovative financial solutions and new model launches to compete.