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This has to be seen as part of the Chinese Belt Road Initiative which is a policy driven by the Chinese Government to spread Chinese influence. The government subsidies allowing Chinese Auto manufacturers to sell their vehicles at cost says this is an aggressive attack on the legacy brands and they are winning.

The end is nigh as the first major car manufacturer being Nissan has sold out to the Chinese and will no longer be manufacturing (June/July) in South Africa. This I find quite alarming at how quickly these events have unfolded and the blame can be landed firmly at the feet of the government and their trade policies. The Nisan employees will be kept on for now, but one has to ask the serious question for how long?

The Chinese Belt Road initiative is all about dominating the manufacturing sector along with the trade routes whilst finding employment for the Chinese people. One would have to be very naive to think the locals will be employed in their current numbers and will either be replaced by Chinese or more robots. My guess it will be a mixture of both and they are just appeasing everyone for now whilst they get their foot in the door. No alarm bells set off and in everyone's minds it is a like for like replacement deal which it is not.

The writing was on the wall when Nissan stopped production of the popular Nissan NP 200 half ton bakkie/van. In May last year Nissan announced they would be shutting down 7 manufacturing/assembly plants around the world and this was obvious that South Africa would be one of the seven. This particular plant has been in operation for 60 years and only in 2019 they spent R3 billion on upgrades to the facility so the end has happened rather fast.

The problem is the Chinese are now going to be assembling locally which makes them one of the local manufacturers/suppliers and any duties that would have been used to protect the legacy car manufacturers locally is now too late. This was the Chinese governments aim right from the beginning and they will do exactly the same in Europe. Once they have removed the legacy car brands that manufacture locally then they have no competition. Prices will adjust accordingly and then you will be paying higher prices for a Chinese brand that no longer requires government subsidies. This is the same modus operandi they used when taking out the manufacturing industry back in the 1990's and this is not good news.

The South African government is pro China so I dare say this was their intention in the first place and they have played a huge role making this happen. US tariffs which could have been stopped in their tracks plus no tariffs on cheap Chinese imports which is common knowledge being subsidized by the Chinese government. SA's relationship would have taken some strain if they increased the import duties to 40% wiping out the subsidies which would have stopped the Chines imports or at least made them less competitive.

What nay are not understanding is the Chinese car prices are less the subsidy and when the Chinese government stops paying this out then those prices will rise accordingly. Would the locals be happy paying 30% more for the same vehicles and I guess they will have no choice because then it is too late and your only selection will be Chinese.

Nissan last month only sold 1011 vehicles which was far less than Chery who sold more than double that number with 2249.

Posted Using INLEO