The big question facing owners of Chinese cars

Showrooms for Omoda and Jaecoo, brands of Chery, in SA’s main automotive industry hub of Nelson Mandela Bay in the Eastern Cape. Picture: Leon Sadiki/Bloomberg The flood of ultra-competitive options from Chinese brands that have entered the market have seen consumers flock to these offerings, which include mainly SUVs from GWM, Chery, Omoda, Jaecoo, Jetour, MG, JAIC and BAIC. The country’s largest seller of pre-owned vehicles, WeBuyCars, highlighted this in January, saying that the rise of these marques “has significantly influenced consumer behaviour and heightened competition”.

“These brands have captured notable market share through attractive pricing and compelling new vehicle offerings.” Jebb McIntosh, CEO of Combined Motor Holdings (CMH), which operates 38 retail dealerships across the country, is a little more candid: “The days of buying an ‘inferior’ Chinese vehicle to save a little money have been replaced by the reality of favourably priced offerings with high quality build and superior specifications.” Writing in the group’s annual report, McIntosh adds: “The dominant feature of the national new-vehicle market continues to be the growing impact of the Chinese/Indian imports, and the unprotected pressure this is creating for the traditional local manufacturers.” He points to the fact that vehicles sourced from India and China now make up 55% of the total sold in South Africa, with the former comprising 39% of total sales (mainly across Suzuki, Toyota and Hyundai cars) and the latter already at 16%. McIntosh emphasises that: “It will be interesting to track how the Indian/Chinese vehicles fare when they eventually enter the used car market in high volumes.” This is the big unknown, one facing the hundreds of thousands of owners of these vehicles currently. According to Naamsa data, more than 160 000 vehicles across Chinese brands, together with Suzuki and Mahindra, were sold domestically last year.

While it is true that not all Suzuki models come from India, the bulk do. In addition, the sales of Toyota and Hyundai models from India is a significant portion of their respective bases. CMH has one data point on Chinese/Indian vehicles, given that it owns First Car Rental, with a fleet of over 9 000 vehicles.