South Africa

Three car brands taking over South Africa

Suzuki, Haval (GWM), and Chery experienced significant growth in South Africa throughout 2024, taking market share from more established brands in the country, such as BMW, Mercedes, Audi and VW. 

This has been revealed in the full-year sales data of car brands in South Africa, which was released in early January by the Automotive Business Council (naamsa). 

The data showed that it was a very difficult year for new car sales in South Africa, with total vehicle sales decreasing by 3% compared to 2023. 

Car sales remained relatively flat, growing a mere 1.1%, while light commercial vehicle sales skyrocketed by 12%. 

The sluggish sales growth has been attributed to a difficult economic environment and, in particular, a consumer under immense financial pressure with a rising cost of living and high interest rates. 

In this environment, Suzuki, GWM, and Chery have been the standout performers, managing to grow their sales as South African motorists hunt for value and search for cheaper alternatives. 

Suzuki has seen particularly strong growth, with its sales increasing by over 300% in the past five years. 

It has become a regular fixture in the top 10 most-sold car brands in 2024 and a close competitor to Volkswagen (VW) for the second spot behind Toyota.

In 2014, Suzuki sold a mere 6,402 cars throughout the year. Now, it sells nearly the same number of cars in a month, with its monthly figures peaking at 6,006 cars sold in October. 

The Japanese company has been able to ensure its competitiveness despite a difficult economic environment by deciding to shift its manufacturing to India. 

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 and the three-door Jimny are imported from Japan. 

This has enabled Suzuki to avoid passing 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, excluding Audi, of R259,400 and R1,723,800.

The graph below shows Suzuki’s tremendous growth over the past decade alongside the strong growth of GWM and Chery. 

GWM and Chery have benefitted in a similar fashion to Suzuki by leveraging the lower cost of manufacturing in its home country of China. 

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. Affordability has been the main driver behind new vehicle sales, and luxury brands have come under pressure across the board. 

 Around 66% of vehicles sold in South Africa 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. 

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. 

However, Chinese brands must overcome some challenges if they want to continue growing in South Africa. 

Chief among these is the brand loyalty South Africans show to brands such as Toyota and VW, with these two remaining dominant in the country. 

Furthermore, Nedbank MFC has flagged after-sales support as another major challenge for Chinese brands in South Africa, many of which lack an extensive dealership network. 

It expects established players to benefit from this until the new entrants build out their network and can offer similar levels of service. 

Chinese brands may also become victims of their own success. GWM and Haval compete in the same market segments, and as they grow, they risk eating into each other’s market share. 

Another challenge has emerged in recent weeks, with the revelation that Chinese brands may not hold their value well in the second-hand market. 

This is chiefly because of their attractive engine warranties only applying to the original owner of the vehicle and not being transferable on sale. 

Chinese brands like Chery and GAC Motors have been lauded for offering among the longest engine warranties of all cars on the market to instil trust in their vehicles.

In the case of Chery, each one of its models is covered by a 10-year/1-million kilometre engine warranty.

TopAuto reported that in November 2024, GAC Motors, which opened its doors on local soil in August of the same year, launched lifetime engine warranties for its GS3 Emzoom and Emkoo SUVs

While these extended after-sales agreements are valuable for inspiring confidence, they come with one important caveat potential clientele must be aware of – they are only valid for the original owner of the vehicle.

This means that they are unlikely to bolster after-sales value once the first buyer lets go of the car.

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