Chinese car brands disrupt South Africa’s vehicle market, with production and exports declining

Chinese vehicles have made bold advances since entering the South African market, putting local auto producers under pressure.

According to recent data from the National Automobile Association of South Africa (Naamsa), year-to-date production has plunged by 18.8% compared with the same period last year, a striking testament to the growing strain on the sector.

Chinese vehicle brands, in contrast, have seen remarkable growth in South Africa’s light vehicle market over the past five years. Data from industry information provider Lightstone, released in August, shows that their market share rose from just 2% in 2019 to 9% in 2024.

GWM, which owns popular car brand Haval, supplied 96% of those sales in 2019 and in 2024 was joined by Chery. Together they have sold 88% of Chinese-branded vehicles locally this year.

A notable shift in consumer buying patterns is affecting the market, with many South

Africans opting for more affordable vehicles, leading to a rise in the popularity of

Chinese brands, said Kriben Reddy, the chief executive of digital solutions platform

Kredo Mobility.

“These brands offer a compelling value proposition, combining affordability with quality, and are meeting consumer needs more effectively than some traditional players,” Reddy said. 

The aggressive pricing and marketing strategies employed by Chinese brands have created significant competition for local manufacturers, he added, hurting their ability to compete effectively, particularly in the lower and mid-range segments of the market.

“These dynamics highlight the challenges local manufacturers face in adapting to a rapidly

evolving and increasingly competitive market landscape,” Reddy said. 

Sales data from Standard Bank released in September shows that the number of Chinese cars purchased via its vehicle finance unit has consistently increased year-on-year from just over 6% in 2022 to 7.4% in the first half of 2024. 

GWM’s Haval is the most popular Chinese brand financed by Standard Bank since 2022, followed by Chery and BAIC.

The bank noted that these Chinese cars found particular favour in Gauteng, where Standard Bank concluded 54% of the deals. KwaZulu Natal (18%) and Western Cape (10%) also contributed to their growing presence.

Vehicle buyers in South Africa are making similar purchasing decisions to their counterparts worldwide, with a strong focus on connectivity, in-car experience and technology, according to Ghitesh Deva, a partner at Forvis Mazars.

“Chinese brands have successfully positioned their offerings to cater to these priorities at price points that traditional European, Japanese and American OEMs [original equipment manufacturers] have struggled to match. 

“Consequently, Chinese brands are rapidly gaining market share, supported by their commitment to quality, as evidenced by product warranties that are hard for consumers to overlook,” Deva said. 

Chery, Jetour and Omoda have offered 10-year or 1 million kilometre engine warranties. In South Africa, a typical engine warranty for new vehicles usually ranges from 3 to 5 years or 60 000 to 150 000km, depending on the manufacturer and model.

While the demand for vehicles in the country can influence how many are produced locally, this effect is often limited, Deva said. This is because local production is more closely aligned with the global logistics and strategies of the original equipment manufacturers. For example, a local factory might primarily produce vehicles for export, as part of a global supply chain, rather than strictly meeting domestic demand.

Deva said Chinese manufacturers’ ability to produce vehicles at highly competitive prices had disrupted markets globally. 

“For example, one of Germany’s largest OEMs recently announced the need for drastic cost reductions to remain competitive. This includes closing factories and making significant workforce reductions, particularly in Germany, as a response to the increasing competition from Chinese manufacturers,” he said. 

Vehicle export sales have dropped significantly this year, down by 23.9% in the 11 months to November, compared with the same period last year. Exports for November saw a sharp decline of 28.6% versus the same month last year, according to Naamsa.

The association said the slide reflects a challenging macroeconomic context and a weaker rand. 

“The US dollar has appreciated against most currencies, including the rand. Monetary policy in major economies will remain restrictive, with new inflation pressures and heightened uncertainty over the past two months suggesting diminished policy space. 

“Domestic vehicle exports will remain a function of the direction and the economic performance of global markets in the new year,” it said.

Reddy said the reduction in exports to the EU presents a significant challenge to the sustainability and competitiveness of South Africa’s vehicle manufacturing sector.

The automotive industry remains a vital contributor to the economy, accounting for around

5.3% of GDP. A drop in export volumes directly affects the industry’s ability to maintain its role as an economic driver.

The fallout from this is underutilised manufacturing capacity, with factories optimised for export markets operating below capacity, job losses, not only in manufacturing but also in the broader automotive value chain, including suppliers and logistics and reputational impact, Reddy said.

“Sustained declines in exports may erode South Africa’s standing as a reliable and competitive hub for vehicle production, potentially deterring future investments,” he said.

Deva said depressed exports might also be because of South Africa’s offering to the global market.

“The European region has set a firm deadline for the sale of zero-emission vehicles. Since a significant proportion of South Africa’s vehicle exports go to this region, the sustainability and competitiveness of the local manufacturing industry are directly tied to its ability to transition to producing zero-emission vehicles,” he said.

“The industry’s future depends on the swift action of relevant stakeholders, as the window of opportunity is closing rapidly.”

While there are initiatives to promote electric vehicle (EV) production in the country, they remain limited, Reddy noted.

South Africa would probably start producing its first electric vehicles in 2026, the department of trade, industry and competition said last year, as former minister Ebrahim Patel outlined plans for the country’s green transport transition.

“Expanding these efforts will be essential for South Africa to compete in the growing global EV market,” Reddy said.