With the overall South African (SA) domestic vehicle market has seen a decline of -6% Year-to-date, and vehicle exports have slumped with a -16,8% decline for the same period, Chinese car brands are seeing a surge in popularity across South Africa, defying market challenges.
According to Standard Bank, the number of Chinese cars financed by Standard Bank Vehicle Finance has consistently increased year-on-year since 2022.
Standard Bank’s sales data shows that the proportion of Chinese car brands increased from just over 6% in 2022 to 7.4% in the first half of 2024. Derick De Vries, Head of Automotive Retail at Standard Bank Vehicle and Asset Finance, says this quantum of growth is intriguing when especially considering the broader decline in new vehicle sales in the country. “Even though Chinese brands currently represent less than 10% of our retail sales, their upward trajectory is remarkable given the challenging market conditions,” he says.
The Automotive Business Council’s quarterly reviews confirm that year-on-year new vehicle sales have been declining since the third quarter of 2023. In the second quarter of 2024, new vehicle sales dropped by 9.6% compared to the corresponding quarter in 2023. During this same period, Standard Bank Vehicle Finance financed more new Chinese car brands.
The importance of the Automotive industry in SA is significant with the automotive industry contributing 5.3% to overall SA GDP. In 2023, the export of vehicles and automotive components reached a record amount of R270.8 billion, equating to 14.7% of South Africa’s total exports, and the industry accounts for 21.9% of the country’s manufacturing output. South African produced vehicles and components are exported to 148 international markets while the manufacturing segment of the industry presently employs around 116,000 people across its various tiers of activity.
Standard bank automotive stats show that GWM Haval, is the most popular Chinese brand financed by Standard Bank since 2022 followed by Chery and BAIC. These Chinese cars find particular favour in Gauteng, where Standard Bank concluded 54% of Chinese car brand deals. KwaZulu Natal (18%) and Western Cape (10%) also contribute to their growing presence.
De Vries says these brands are clearly gaining significant traction, reflecting a broader global trend where Chinese vehicles are taking more market share, driven by competitive pricing and growing consumer confidence. “We are seeing a notable shift in the South African automotive market because of the popularity of Chinese car brands. We constantly see GWM brands in the top ten of Naamsa’sVehicle Sales by Manufacturer list,” he concludes.
The Automotive Business Council, who released its monthly sales numbers for August yesterday, said that the positive July 2024 new vehicle market performance could unfortunately not fuel a sustained rebound in the August 2024 sales performance. Aggregate domestic new vehicle sales in August 2024, was 43,588 units, and reflected a decrease of 2,266 units, or a loss of 4,9%, from the 45,854 vehicles sold in August 2023. Export sales decreased by 14,658 units, or a significant 34,3%, to 28,073 units in August 2024 compared to the 42,731 vehicles exported in August 2023.
A distinguishing trait of the motor industry from other industrial sectors in SA is the importance of government policies in steering its development. Since the implementation of the Motor Industry Development Programme (MIDP) in September 1995, the South African automotive sector has grown to become the leading manufacturing sector in the country’s economy. Vehicle exports under the MIDP, the Automotive Production Development Programme (APDP) and APDP Phase 2, from 1995 up to 2022, totalled 5 641 644 units of which 3 848 480 passenger cars, 1 770 617 light commercial vehicles, 19 516 heavy commercial vehicles and 3 031 buses. The export value of vehicles for this period amounted to R1 548,0 billion (ZAR) while the export value of automotive component exports amounted to R892,6 billion.
