The rise of Chinese cars in SA and what it means for legacy brands

The rise of Chinese cars in SA and what it means for legacy brands

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‍History has an interesting way of repeating itself. We’ve seen it before where the local automotive fold shifted in ways that once seemed unthinkable. Right now, sedans, and to an extent, hatchbacks are slowly disappearing from the spotlight as more buyers flock to SUVs and crossovers. Meanwhile, bakkies are stealing the show, with nearly every manufacturer vying to add one to their lineup.

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Speaking of history, the South African car market has long been dominated by legacy manufacturers like Toyota, Volkswagen, Mercedes-Benz, BMW, and Ford, to name a few. But every now and then, there have been moments when new vehicle entrants shook up the market. Think back to the late 90s and early 2000s; Korean car brands such as Kia and Hyundai made leaps by offering well-priced, well-specced cars that posed a significant challenge to the established players. Then came Indian carmakers like Tata and Mahindra in the 2000s and 2010s, utilising a similar strategy.

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At first, these brands were met with scepticism. There were concerns about quality, reliability, and long-term value, but over time, some proved their worth and carved out a solid position in the local market. That said, if history really does repeat itself, then we’re seeing it unfold once again, this time with Chinese automakers rewriting the rules of the game.

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It’s been an intriguing chess game. Chinese automakers attempted to enter the market in the late 2000s, but their ambitions didn't work out as planned. Buyers were hesitant to buy Chinese cars due to quality concerns, poor safety ratings, and a lack of brand trust. Take the Chery QQ3, for example; it scored zero stars in Latin NCAP crash tests, had no airbags, and felt like it was built from plastic and ambition. The first Tiggo, on the other hand, was essentially a budget-friendly knockoff of the Toyota RAV4, but with poor-quality plastics, questionable reliability, and an engine that didn’t inspire much confidence.

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Chery realised that it wasn’t going to win over the market that way. So in 2018, it pulled out of the market, went back to the drawing board, and came back in 2021 with a completely different approach. This time, the marque wasn’t just building cars, it was making cars that people actually wanted to buy. Alongside Chery, other Chinese brands like GWM, Geely, and FAW also entered the market, marking the beginning of a significant shift. As it stands today, there are 12 Chinese car manufacturers available in SA, which, by July 2024, accounted for 9% of all passenger and light commercial vehicles sold locally. This number has likely grown since then. Haval’s sales, on the other hand, have skyrocketed, with 19,904 units sold in 2024, representing a 2,000% increase since 2019.

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As more brands enter the scene and new models keep coming, it’s clear that Chinese vehicles are gaining traction and becoming increasingly popular among South African buyers.

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How does this affect legacy brands?

The growing presence of Chinese cars in SA can mean several things for legacy brands we’ve come to know and trust. For one, it means increased competition. The brands from the East have quickly built a reputation for offering good-quality cars at competitive prices, directly challenging the established players. And now, with more buyers attracted to the value-for-money proposition, legacy brands have no choice but to stay competitive, not just in pricing, but also with the features they offer, such as superior levels of tech, safety systems, and comfort.

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What's even more interesting is that brands like Haval, Chery, BAIC, and BYD have quickly caught up in terms of design and technology by selling cars that are well-equipped with sophisticated features. This means that established brands now have to stay on their toes and constantly come up with innovations to keep up with the Chinese competition. If not, they risk losing market share to their newer and more competitive Chinese competitors.

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Take the Chery Tiggo 7 Pro Max, for example; it’s priced at R609,900 and comes with all the bells and whistles you'd expect from a high-end vehicle. Now, compare that to its direct German competitor, the VW Tiguan TSI R-Line range-topper, which will set you back R852,600. This is where the Chinese brands see a gap and make their move. They’re offering comparable features at a much more accessible price.

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It reminds me of what happened to BlackBerry. Remember how, at one point, they were the dominant smartphone brand, but they didn’t adapt quickly enough to changing trends? The arrival of touchscreens, apps, and more consumer-focused devices completely changed the game.

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As mentioned earlier, the quality standards of Chinese cars have improved over the years, and legacy brands undoubtedly feel the pressure to continuously innovate – a high-cost exercise in itself – to keep up with the fast-paced evolution of the East. Also, consumer preferences are fast changing, and they are becoming increasingly less wary of brands they once viewed as inferior. It's a vicious cycle since the local motoring landscape is driven by brand perception and value.

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Recently, I have had strangers asking if their new purchase should be German or Chinese. Who would've thought we'd see a time like this? Honestly, I never saw it coming either.

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Then there’s the electric vehicle (EV) market, which is seeing a significant surge of Chinese products. Brands like BYD and GWM, who are key players in China’s EV scene, have brought some serious competition to SA. In fact, China leads the EV revolution globally after producing over 60% of the world’s EVs in 2023. The EVs aren’t just packed with features, they also offer impressive electric driving ranges and come at surprisingly affordable prices. Honestly, some of the legacy brands have been a bit slow to fully adopt EVs and hybrids, and with the rise of Chinese EVs like the Ora, Dolphin, and Atto 3, they're starting to feel the heat.

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The exciting bit is that currently, the cheapest electric car is the BYD Dolphin Standard Range, which carries a price tag of R539,900. For reference, the most affordable EV from these legacy brands is the Mini Cooper SE at R802,000. Clearly, the landscape is changing, and as more Chinese companies enter the EV market, legacy brands face increasing pressure to not only stay competitive but also take the lead in sustainable mobility. If legacy giants don’t adapt their products to meet the growing demand for affordable EVs, they could easily lose their edge in the rapidly evolving car market.

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As Chinese brands gain a stronger presence in the local market, they may push for more local production to cut import costs and take advantage of local incentives. This could create challenges for existing plants while also creating jobs and potentially changing production strategies. Legacy automakers will need to adapt to the increased competition, especially the growing demand for EVs. How they respond will determine whether they can thrive alongside these new players or struggle to stay relevant.

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What’s next for legacy brands?

To stay competitive against the rise of Chinese vehicles, legacy brands will likely need to rethink their strategies, including forming partnerships or even collaborations with Chinese marques. What’s becoming clear, though, is that legacy brands can’t afford to just sit back and hope for a shift in the tide. They’ll need to actively form strategic alliances, improve the overall customer experience, and ensure their vehicles offer competitive features at price points that resonate with today’s market. In the end, it’s clear that Chinese car brands are no longer just emerging players; they’re serious contenders. Those who adapt will thrive; those who resist may find themselves left behind.

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