Brand loyalty is becoming less important to South African car buyers than bang for their buck, which has seen a spike in the sales of competitively priced Chinese cars to the detriment of many long-standing brands.
Amasi Mwela, CEO of car sales platform Cars.co.za, said an affordability crisis was driving consumers to buy more second-hand cars or new Chinese brands.
He said at the Auto Week conference in Cape Town, hosted by Naamsa, that the influx of new or returning Chinese brands had caught the tide at the right time by offering well-priced SUVs — the most popular car segment — in a market experiencing an affordability crisis.
While sales of Toyota, Volkswagen, Suzuki and Hyundai remain strong, Chinese marques such as Chery and GWM/Haval have become household names in the past few years and overtaken legacy brands such as Mazda, Nissan, Renault, Mitsubishi and Kia in monthly car sales.
More recent entrants BAIC, Omoda and Jaecoo are also gaining sales traction as cash-strapped consumers are drawn to the improved refinement of modern Chinese cars and the large number of features on offer for less money than traditional brands.
BYD, Jetour, Dayun and GAC Motor are other recently introduced players from behind the Red Curtain that offer hot pricing rather than heritage, and consumers are buying into it.
While their long-term reliability and resale values are unknown, the latest Chinese cars offer good warranties and are shedding their negative reputations with improved build quality.
They are eroding the market share of brands that have been in South Africa for decades and it has the establishment worried.
“Chinese players have brought the fight to the big dogs and caused discomfort in the market. They have capitalised on the affordability crisis,” said Anele Geza, CFO of BAIC, which has achieved relative success with its Beijing X55 SUV.
Mitsubishi Motors SA CEO Thato Magasa said whenever the market entered a recessionary environment the trend had been for new entrants to launch cars in the country, only to leave after a few years as happened with a number of Chinese brands including Chery, Geely and GoNow. Chery has subsequently returned.
“It’s easy for them to exit again but what do they leave behind?” asked Magasa. “Imported brands such as Mitsubishi, Renault, Hyundai and Kia are fundamentally South African businesses with well established retail networks and financial services.
“What contribution are new brands making to South Africa Inc? They are threatening long-standing brands that are committed to South Africa.”
Most Chinese car brands are state-owned and their prices are subsidised. Magasa acknowledged that Chinese cars offered price savings over legacy brands, but there was little the establishment could do to make their cars more affordable without a reduction in import duties.
He said the average skilled worker earned about R25,000 a month, which was not enough to buy a mid-range car priced at R500,000.
With all the newcomers entering a market that was not growing — new-vehicle sales in 2024 are about 6% lower than last year’s — it was unlikely that all brands in South Africa would survive, said Paul-Roux de Kock, chief analytics officer at Lightstone.
However, he added that many new entrants undercut the establishment initially but raised their prices as their brand became more popular.
Why more affordable Chinese cars have legacy brands worried
Bang for buck is becoming more important than brand loyalty with cash-strapped buyers
Image: Supplied
Brand loyalty is becoming less important to South African car buyers than bang for their buck, which has seen a spike in the sales of competitively priced Chinese cars to the detriment of many long-standing brands.
Amasi Mwela, CEO of car sales platform Cars.co.za, said an affordability crisis was driving consumers to buy more second-hand cars or new Chinese brands.
He said at the Auto Week conference in Cape Town, hosted by Naamsa, that the influx of new or returning Chinese brands had caught the tide at the right time by offering well-priced SUVs — the most popular car segment — in a market experiencing an affordability crisis.
While sales of Toyota, Volkswagen, Suzuki and Hyundai remain strong, Chinese marques such as Chery and GWM/Haval have become household names in the past few years and overtaken legacy brands such as Mazda, Nissan, Renault, Mitsubishi and Kia in monthly car sales.
More recent entrants BAIC, Omoda and Jaecoo are also gaining sales traction as cash-strapped consumers are drawn to the improved refinement of modern Chinese cars and the large number of features on offer for less money than traditional brands.
BYD, Jetour, Dayun and GAC Motor are other recently introduced players from behind the Red Curtain that offer hot pricing rather than heritage, and consumers are buying into it.
While their long-term reliability and resale values are unknown, the latest Chinese cars offer good warranties and are shedding their negative reputations with improved build quality.
They are eroding the market share of brands that have been in South Africa for decades and it has the establishment worried.
“Chinese players have brought the fight to the big dogs and caused discomfort in the market. They have capitalised on the affordability crisis,” said Anele Geza, CFO of BAIC, which has achieved relative success with its Beijing X55 SUV.
Mitsubishi Motors SA CEO Thato Magasa said whenever the market entered a recessionary environment the trend had been for new entrants to launch cars in the country, only to leave after a few years as happened with a number of Chinese brands including Chery, Geely and GoNow. Chery has subsequently returned.
“It’s easy for them to exit again but what do they leave behind?” asked Magasa. “Imported brands such as Mitsubishi, Renault, Hyundai and Kia are fundamentally South African businesses with well established retail networks and financial services.
“What contribution are new brands making to South Africa Inc? They are threatening long-standing brands that are committed to South Africa.”
Most Chinese car brands are state-owned and their prices are subsidised. Magasa acknowledged that Chinese cars offered price savings over legacy brands, but there was little the establishment could do to make their cars more affordable without a reduction in import duties.
He said the average skilled worker earned about R25,000 a month, which was not enough to buy a mid-range car priced at R500,000.
With all the newcomers entering a market that was not growing — new-vehicle sales in 2024 are about 6% lower than last year’s — it was unlikely that all brands in South Africa would survive, said Paul-Roux de Kock, chief analytics officer at Lightstone.
However, he added that many new entrants undercut the establishment initially but raised their prices as their brand became more popular.
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