Big boost for Chery and Haval in South Africa – and bad news for everyone else

Automotive retailing giant Motus has added eight Chinese brands to its domestic portfolio, among them Chery, Haval, and MG.

This comes amidst a drop in market share for the company’s headlining brands which are Hyundai, Kia, Renault, and Mitsubishi.

Motus is the sole importer and distributor of these four nameplates for South Africa and a number of other African markets, revealing in its latest interim results that they collectively recorded a 2.5 percentage point decrease in market share between July and December 2024, accounting for 16.9% of passenger vehicle sales in this period.

The downturn was due to a variety of factors, including increasing competition from Asian automakers, particularly those from China and India.

This prompted Motus to take action and expand its own portfolio with eight Chinese manufacturers, as well as ink a deal with Indian conglomerate Tata to market and sell its passenger cars in South Africa for the next five years.

While Motus is aware that the onslaught of Chinese brands is unsustainable and that “one or two casualties” are expected in the future, it’s confident that it picked the right ones to safeguard its balance sheets.

The Chinese autos will henceforth be sold through multi-franchise Motus dealers alongside more established badges as they do not yet have a user base big enough to justify investment into bespoke showrooms and workshops.

With the addition of these eight Chinese manufacturers, the number of individual brands under the Motus umbrella grows to an impressive 39 which are retailed through a network of 80-plus dealers across South Africa and its northern neighbours.

Alarm bells for well-established automakers

With Chery and Haval already outselling as many as 18 well-established brands in South Africa, the news that they’ve been picked up by Motus no doubt worries these companies.

With over 80 more locations through which buyers can now access the Chinese cars, they are being opened up to a much bigger pool of consumers than they’ve been for the past few years which is all but guaranteed to lead to even more monthly registrations.

Automakers such as Toyota, BMW, and Isuzu have already sounded the alarm on Chinese dominance in the automotive sector, stating that something must be done to protect the interests of companies with South African vehicle production facilities as they are the backbone of the domestic manufacturing sector and key contributors to the country’s GDP.

Toyota and BMW have put forth the idea of Original Equipment Manufacturers (OEMs) being able to convert import duty credits into cash, something that’s currently not possible.

Import duty credits are awarded to OEMs who produce a minimum threshold of vehicles within the country every year, and allow these automakers to reduce import taxes on vehicles and components that are not locally made.

Many of the country’s OEMs are stuck with a surplus of credits as their value surpasses import requirements, and they claim that being able to convert these into cash will lower production costs and, in turn, vehicle prices, which will lead to greater competitiveness for these makes against Chinese rivals.

“Price plays a major [role] in consumer decisions. President Ramaphosa said last week we have to address affordability. This proposal would do that,” said Peter van Binsbergen, CEO of BMW South Africa.

The nation’s OEMs will implore government to allow them to convert their unused import duty credits into cash during the upcoming review of the country’s Automotive Masterplan 2035, which is scheduled to be completed before the end of the year.