Chinese Car Market Not Sustainable In South Africa
The Chinese car market in South Africa has been growing very quickly and this will implode at some point due to the numbers not being sustainable. Since May 2025 which is only a 6 month time frame there have been 41 new Chinese passenger models launched and on sale in South Africa.
The demand for the various Chinese models has been driven by affordability with models ranging from R260K ($15K) up to R1.6 million ($95K). Initially it was the price and extended warranty and service pans that gave them the edge with many of the Chinese models offering service and warranty packages between 5 and 7 years. Many of the local European brands have since countered the Chinese brands with offerings of 5 years now. This is all being fought over price now and customers are not thinking beyond this and they need to understand there are many other factors at play.
What will be the value of these cars in 3 or 5 years time and what Chinese brands will still be active? The after market sales with servicing and spare parts is a concern with reports of customers waiting to repair their cars at panel beaters for as long as 6 months. This would only be found out after you have purchased the car and the Chinese do not have a great track record when it comes to after market sales.
The real value is determined not by the cheaper purchase price, but by the demand in the market when it comes to the second hand car market. Prices are then driven by whether the brand has a good name or not like good servicing and readily available spares. The truth will come out with the possibility of customer shaving high maintenance costs and a highly reduced resale value. This takes years to build a brand reputation and months to ruin one if not done correctly.
The other problem is there are talks currently about issuing increased tariffs on all imported cars to help protect the local manufacturers. Those extra tariffs would then be used to subsidies local vehicle manufacturers bringing them on apar with imported Chinese car brands. This would mean that the once cheap price is no longer cheap and all spare parts have increased in price.
There are currently 11 Chinese car brands in South Africa with one more being added this month bringing the number to 12. The reality is there are going to be some of these brands that will disappear as the market is too small for everyone to succeed. In September the new car market achieved 54700 units which is an all time high for the last 10 years. The market averages at around 500K vehicles per annum which is a small number when comparing to other countries. Having 12 new car brands join the market will end up with a cannibalization effect leaving only a few Chinese brands remaining.
BAIC and Chery are talking about opening car plants in South Africa which would bypass the import tariffs and seal their future in the SA car market, but one should be careful and consider the value of any car when it is time to resell. Some car brands hold their value better than others and the Chinese brands are an unknown still to be revealed.
The brands that close down and leave will impact their customers having a direct impact on their residual values. I know this happened to a friend of mine a few years ago when his car brand company pulled out the country and his resale value was down to below 25%.
Posted Using INLEO