Chinese car brands are making spectacular inroads into the South African market, but automotive group Motus Holdings — a major importer of Korean and Japanese vehicles — says the newcomers might be a flash in the pan.
“What no-one knows, including us, is how many of these brands will be here in five years’ or three years’ time?” said Motus CEO Osman Arbee. “Because it’s nice to come into a country, but they can leave at the same time, as quickly as well.”
According to Standard Bank, Chinese car brands are experiencing a surge in popularity across South Africa, defying market challenges. Despite overall retail sales facing pressure, the number of Chinese cars financed by the bank has increased year-on-year since 2022.
Standard Bank’s data shows the Chinese brands boosted their market share 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 the pace of growth is “intriguing”, particularly in light of the broader decline in new vehicle sales.
“Even though Chinese brands currently represent less than 10% of our retail sales, their upward trajectory is remarkable given the challenging market conditions,” he said.
Last month Chinese car manufacturer GAC entered the South African market after entering into an agreement with Salvador Caetano Group to handle distribution and retail operations 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,
— Derick De Vries, Standard Bank
JSE-listed Motus, which imports, distributes and sells new cars, has recorded a decline in sales on the back of high interest rates.
Motus has Chinese brands Haval and Chery in its portfolio, but Arbee said: “What’s the support [for Chinese brands] going to be like two to three years from now? No-one knows that. So yes, it’s disruptive at the moment, but I think it will settle down within 12-18 months. Then we will be able to figure out who’s here to stay, who’s here for the long term. So hopefully in the next 12 months or so, we’ll know better.”
De Vries said Chinese vehicles were grabbing market share around the world thanks to competitive pricing and increasing consumer confidence in the brands.
Motus, which released its results for the year to end-June this week, reported a 22% decline in revenue to R9.3bn for its import and distribution segment, mainly due to reduced sales to the dealer channel. Operating profit decreased 45% to R403m on declining volumes, which it attributed to increased competition, reduced consumer demand, higher prices and costs, and the exchange rate.
In South Africa Motus’s retail and rental business sold 45,151 new units, down from 55,786 last year, and 63,967 second-hand vehicles. The rental business comprises Europcar and Tempest.
Retail revenue for South Africa dropped 5% and operating profit was down 34%.
Dealerships have been giving discounts to consumers to increase volumes and Arbee said this is likely to continue.
Overall revenue growth was 7% to R113.7bn. Motus also operates in the UK and Australia.
JSE-listed diversified group Bidvest said trading in its automotive division declined 24.8% to R688m in the year to June. It described the performance as “disappointing, but an understandable result given the weak and very competitive automotive trading environment. Consumers are experiencing considerable strain on disposable income, negatively impacting demand.”
In South Africa, sales of new vehicles declined 8%, compared with the industry average of 6%. Bidvest said the brand mix at its McCarthy division was “misaligned to current demand trends”. During the year, management had engaged with several new brand owners to secure representation.
Motus said it did not expect a rapid recovery in disposable income levels, due to the depressed economic conditions. “Predicted interest rate reductions will alleviate some pressure and assist in stimulating future growth. Real economic benefits, however, will only be realised in the latter part of 2025,” said CFO Ockert Janse van Rensburg.
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