One car company is quietly taking South Africa by storm, thanks to a business strategy involving several popular auto brands.
The investment holding company Combined Motor Holdings (CMH) has managed to build a successful dealership network involving prominent carmakers, which has nearly doubled its market cap in just five years.
A strategy for success
CMH handles the dealerships, distribution, marketing, and repairs for Haval, Chery, and Suzuki – all of which have experienced a meteoric rise in South Africa over the last few years.
Suzuki is now comfortably sitting as the third best-selling automaker in the country, and it actually managed to outperform long-time favourite VW for the first time in 2024 – a feat that seemed unimaginable at the start of the decade.
Similarly, Chery and Haval are outselling 18 major brands in South Africa despite having been on the market for a fraction of the time that legacy names like BMW, Mercedes-Benz, and Volvo have been here.
Illustrating this rapid ascension is the fact that Haval sold 14,265 units in 2023 – roughly double what it achieved just three years earlier.
This has been good news for CMH, whose operating division is responsible for the retail and distribution of 28 brands in South Africa, including Suzuki, Haval, and Chery.
The growing popularity of these Japanese and Chinese manufacturers has had a dramatic effect on CMH’s bottom line, as the holding company has doubled its profit margin to R408 million in the last five years, according to Daily Investor.
Notably absent from CMH’s list of brands are German luxury makes like BMW and Mercedes-Benz, as the company has elected to focus on affordable Asian-manufactured vehicles.
Admittedly, CMH does have operations with the premium brand Jaguar Land Rover, but this accounts for only a small part of its business.
CEO Jebb McIntosh commented on the local shift towards cheaper vehicles from Asia in the company’s integrated report for the 2024 financial year.
He noted that more than half of vehicles sold in South Africa are brought in from India or China, reflecting a consumer shift towards more obtainable options.
CMH is also the largest importer of parts for Chinese models through its Mandarin Parts Distributors, which has led to a 20% jump in profits for its components division.
On the other end of the spectrum is Motus, a competitor to CMH that operates dealerships for upmarket badges like Audi, BMW, Mercedes-Benz, Jeep, and Jaguar Land Rover.
It is also the exclusive importer of Kia, Hyundai, Renault, and Mitsubishi and distributes these vehicles and parts across the continent.
Motus’ latest report for the current financial year noted that there is a growing trend of motorists buying down, looking for cheaper alternatives, delaying upgrades, or forgoing purchases entirely.
This, combined with higher-than-normal inflation for new vehicle and component prices in South Africa, has negatively impacted Motus’ profitability.
The downsizing trend is not expected to dissipate anytime soon, as there has been a consistent year-on-year increase for finance plans covering Chinese cars, according to Standard Bank.
“Even though Chinese brands currently represent less than 10% of our retail sales, their upward trajectory is remarkable given the challenging market conditions,” said Derick De Vries, Head of Automotive Retail at Standard Bank Vehicle and Asset Finance.
“These brands are clearly gaining significant traction, reflecting the broader global trend where Chinese vehicles are taking more market share, driven by competitive pricing and growing consumer confidence.”
It’s also important to mention that vehicle sales in general have been declining for most of 2024 while brands like Suzuki, Chery, and Haval are gradually improving their numbers, meaning they are slowly but surely growing their market share in South Africa with CMH coining it along the way.
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