South Africa has welcomed several new affordable cars over the last few years, but they aren’t coming from the country you think they are.
While China has dominated headlines in recent times with the release of new brands like Jaecoo, Jetour, and GAC; these automakers are actually targeting the upmarket SUV segment, leaving a gap for even cheaper transport to make their mark.
This gap has been predominantly filled by cars sourced from India, coming from several popular makes like Suzuki, Toyota, Hyundai, Mahindra, Honda, and Citroen that now make up roughly 42% of all local passenger car sales.
The Mecca of affordable cars
India’s automotive manufacturing sector has grown dramatically over the past two decades, attracting $19.3 billion (R350 billion) in investment between 2000 and 2018.
It is seen as an attractive market for foreign investment owning to lower production and labour costs, making it an ideal location for carmakers trying to produce more affordable products.
One of the best illustrations of this trend is Citroen and its parent company Stellantis, which is re-adjusting its business strategy to cater to the entry-level sector in South Africa.
Citroen’s previous roster of cars, including the C3 and C3 Aircross, were produced and exported from Europe, leading to prices well over R300,000.
The company has since changed tactics with a new selection of Indian-sourced models with the same names but much cheaper price tags, as the new C3 and C3 Aircross slashed their costs by R76,000 and R105,000 at launch, respectively.
Citroen is by no means the only manufacturer benefitting from this strategy, however, as Suzuki, Toyota, Hyundai, and Honda also sell Indian-built cars in South Africa.
Hyundai is following a similar strategy to Citroen, as it has reshuffled its line-up over the past year to be friendlier to people’s wallets, discontinuing premium badges like the Kona while placing a bigger emphasis on the Indian Grand i10, which has different specs and, of course, costs to the i10 sold in Europe.
Another product to come out of this arrangement is the R269,900 Exter crossover, which is R40,000 less expensive than the brand’s previous entry-level option – the Venue.
The same story applies to the R371,000 Honda Elevate, but the two biggest winners of the Indian import model are undoubtedly Suzuki and its long-time partner Toyota.
Suzuki may be a Japanese brand, but nearly every model sold in South Africa is manufactured by Maruti Suzuki over on the sub-continent, leading to attractive showroom stickers that have proven to a major hit, such as the R219,900 Swift.
Consequently, Suzuki has shot up the sales charts over the past five years and is now the third-best performer overall behind Toyota and VW.
This is only half the story, though, as Toyota is also enjoying the benefits of Indian-built cars thanks to its alliance with Suzuki.
Most of Toyota’s entry-level vehicles are now sourced from Suzuki including the Vitz, Starlet, and Starlet Cross, which are rebadged versions of the Celerio, Baleno, and Fronx respectively.
Both the Toyota and Suzuki versions of these cars frequently end up on the monthly best-seller lists, showing how popular affordable Indian-sourced models are in South Africa.
Looking at South Africa’s own manufacturing sector, the only entry-level passenger car made here is the R266,600 VW Polo Vivo, as BMW and Mercedes-Benz produce the luxury R1,136,417 X3 and R1,065,342 C-Class.
Toyota’s plant in Durban admittedly makes the R336,000 Corolla Quest and the R408,400 Corolla Cross, but this still reflects how all of its cheaper options are now pulled from its arrangement with Suzuki in India.
One category of vehicles that is largely unaffected by this trend is bakkies, as there is still a strong demand for locally-produced models and components.
The South African-made Toyota Hilux, Ford Ranger, and Isuzu D-Max therefore reign supreme in our market, but Indian carmakers are carving out a share in this space, too.
The up-and-coming player in this category is Mahindra, as the Pik Up is now the fourth best-selling model each month with figures ahead of the locally-made Nissan Navara and VW Amarok.
In fairness, the Pik Up is now assembled from semi-knockdown kits in South Africa, but the automaker’s recent selection of passenger cars like the XUV 3XO is also performing quite well, once again showing how important Indian cars are to the affordable end of the market.
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