Rapid rise: Chinese automakers surpass Japanese and European competitors, dominating the South African market

Chinese car brands are gaining prominence on the streets of South Africa's major cities, challenging the longstanding dominance of Japanese and European-made cars in the market, as reported in an article by the South China Morning Post.

Car registrations in South Africa

In South Africa, Japanese automakers like Toyota, Suzuki, and Nissan typically hold a significant portion of the total car registrations and sales. European brands, including Germany's Volkswagen and the South African arm of the US car manufacturer Ford, also command a substantial market share.

However, a notable shift is observed in the family SUV category, where Chinese car manufacturers are gradually gaining ground and reclaiming some market share. Companies like Haval, a subsidiary of Great Wall Motors (GWM), and the Chinese state-owned carmaker Chery are now outpacing certain Japanese, European, and American brands in the SUV segment.

Let's take a look at the insights provided by Naamsa

In the initial 11 months of 2023, Haval and Chery emerged as leaders in the family SUVs and crossovers market, as indicated by data from the Automotive Business Council or Naamsa.

Naamsa, the Automotive Business Council, has evolved into a significant industrial and economic powerhouse, consistently delivering tangible benefits. It plays a crucial role in ensuring mobility, fostering trade, generating sustainable employment, facilitating the movement of people, goods, and services, and actively contributing to community well-being while fostering prosperity for the people of South Africa on a daily basis.

According to an analysis conducted by the South African car advertising platform Cars.co.za, using data from Naamsa, the Haval H6 has emerged as the top-selling SUV in the country during the first 11 months of 2023. With 5,032 units sold, it surpassed the previous leader, the Volkswagen Tiguan, which secured the second position with 3,165 units. Claiming the third spot is the Chinese Chery Tiggo 8 Pro, boasting 2,195 units in sales. Notably, it outperformed South Korea's Hyundai Tucson, which recorded 1,767 units during the same 11-month period, followed by the Mazda CX-5 with 1,283 units.

South Africa's SUV rankings reveal a shift in popularity, as Toyota's RAV4, once the global bestseller last year, now holds the sixth position with 1,021 units registered. Interestingly, SUVs like the Peugeot 3008 and the Citroen C5, both under the European parent company Stellantis, failed to secure a spot in the top 10, as Cars.co.za reported.

There has been a notable reversal of fortunes for certain Chinese automakers, with Chery experiencing a significant turnaround in the South African market. Chery had faced challenges in the past, having been present in South Africa since around 2008. However, in 2018, the brand had to withdraw from the market due to customer complaints regarding car quality, insufficient availability of spare parts, and inadequate after-sales support.

What analysts are saying

Analysts have noted the car manufacturer's dedicated efforts to enhance the quality of its vehicles and establish a reliable dealer network prior to its re-entry into the market in 2021, commencing with the introduction of its smallest SUV, the Tiggo 4 Pro. Subsequently, Chery expanded its offerings with the launch of the medium-sized Tiggo 7 Pro and its flagship model, the Tiggo 8 Pro.

In addition to product improvements, Chery actively supports its South African dealers and customers through initiatives such as a substantial parts warehouse, a robust mechanical warranty, comprehensive service plans, and round-the-clock roadside assistance.

Industry observers highlight the significant role that pricing plays in the current shift towards Chinese cars. Brands like Haval and Chery are positioned as value-for-money options, providing additional features at slightly more affordable rates compared to similar models from European or Japanese automakers.

Competitive pricing an advantage for Chinese automakers

Chinese automakers also demonstrated a cost advantage in comparison to their competitors, enabling them to offer competitive pricing. These vehicles have also evolved into influential diplomatic instruments. In August, Haval and Chery supplied numerous SUVs for transporting delegates throughout Johannesburg at the BRICS summit, an annual gathering of emerging economies comprising Brazil, Russia, India, China, and South Africa.

Delegates and media were transported using models such as the Haval H6, while Chery served as the official presidential vehicle partner. Chery provided 60 Chery Tiggo 8 Pro Max vehicles for the transportation of VIPs and international delegates during the event.

Aluminium consumption in the transportation sector

Worldwide, the transportation sector holds the predominant portion of aluminium consumption, constituting 25- 27 per cent. The interest in utilising aluminium in automobiles has persisted over time, gaining momentum notably after the oil crisis in the 1970s. Focused on enhancing fuel efficiency, automotive designers began substituting bulky steel components with lighter alternatives made from aluminium. Consequently, the proportion of aluminium employed in vehicles has consistently increased, progressing from 35 kg per car in the 1970s to the current average of 160 kg. Projections from experts indicate that the average aluminium content in a car is anticipated to reach 250 kg by 2025.

The anticipated resurgence of the automotive sector in 2024 is expected to play a pivotal role in driving demand for aluminium, as predicted by numerous industry leaders. For comprehensive insights into global aluminium production, consumption, market dynamics, and other pertinent factors shaping the aluminium sector 2024, consider securing your copy of AL Circle's forthcoming report, "Global Aluminium Industry Outlook 2024."