The rise of affordable Eastern imports in South Africa

The top two best-selling passenger cars in South Africa are the Toyota Corolla Cross and Volkswagen Polo Vivo. Both are manufactured domestically. In February, the former accounted for 1,959 units and the latter claimed 1,861 sales.

Close behind them, however, is the Suzuki Swift in third place with 1,627 cars sold last month.

The B-segment hatchback is among various Indian-manufactured models that account for significant sales volumes in South Africa.

The Toyota Starlet (a Suzuki Baleno twin) and Hyundai Grand i10, both hailing from India, also earned positions in the top 10.

The best-selling Chinese-made car is the Chery Tiggo 4 Pro which found 964 buyers last month.

“In the weak macroeconomic climate in the country affordability is driving new vehicle sales,” said Mikel Mabasa, CEO of Naamsa, the national automotive business council.

He confirmed the top country of origin, in volume, for passenger cars and light commercial vehicle imports in 2023 was India, with 157,557 vehicles, accounting for 53.2% of light vehicles imported, while China moved into second place with 39,345 units, accounting for 13.3%.

“India has been [established] as the global hub for the manufacture of small and entry-level vehicles by global brands. As these vehicle [segments] require huge volume manufacturing due to low margins, India is capable of delivering on this,” he told TimesLIVE Motoring.

According to Mabasa, small and entry-level vehicles comprise 60% of the domestic new vehicle market.

“The automotive industry is a global trade and production system with every country manufacturing specific models. Each country then exports manufactured models and imports models to complement their domestic model mixes.”

He referenced policies that encourage the manufacturing of one or two high volume models to obtain higher volumes and economies of scale benefits via exports.

For example, BMW, Mercedes-Benz and Ford each manufacture single model lines locally (X3, C-Class and Ranger); relying on imports for the rest of their South African sales portfolios.

How can South Africa protect manufacturers that locally-source their products from brands that can manufacture more competitively in China and India?

Mabasa noted 77% of passenger cars sold in 2023 were imports, saying the balance was in line with the structure of the industry, to manufacture high-volume models and import low volume models.

“The domestic new vehicle market is competitive, offering 46 brands in 2023 with 2,172 model derivatives to choose from, the largest number of choices compared to market size in the world. Demanding consumers want access to all models globally and therefore the high import penetration.”

“China and India are huge production centres and South Africa, with its 0.65% global market share, the intention is not to compete with these countries but to benefit from the global automotive trade and production system able to satisfy consumer choices.”

We asked Mabasa if Naamsa had engaged to discuss the possibility of local production where Chinese carmakers and brands that source from India are concerned.

Though no specific examples were given, he said South African policy support, free trade agreements and international competitiveness make a country attractive for investments.

“South Africa [manufactures] specific models for the world market with some other locations. South Africa, for example, will service Africa, Europe and the US and another location will service Asia in line with logistical principles.

“Though the South African automotive industry exported vehicles and components to more than 150 countries, the free trade agreements play a major role to enhance exports and in 2023, three out of every four vehicles were exported to the UK and the EU.”