South Africa’s automotive sector is under increasing pressure from the influx of low-cost imported Chinese vehicles.
These emerging brands are changing the affordability equation for local consumers, as many buyers can now afford a new vehicle at the same price as those on the used market.
FNB and WesBank senior economist, Thanda Sithole, explains that this is an attractive proposition for households under strain, but for the domestic automotive industry, the implications are more complex.
He notes that data from the Automotive Business Council (Naamsa) show how quickly Chinese brands have increased their market share, accounting for over 9% of total new passenger vehicle sales in 2024.
At the end of 2024, 14 different Chinese brands were on sale locally, accounting for around 17.1% of all car imports into South Africa.
Today, 21 of these brands operate locally and represent 38.1% of all the brands that can be found in showrooms.
Popular brands like Chery, GWM, and BAIC contributed significantly to this growth, with Chery alone recording year-on-year sales growth exceeding 80% throughout 2023 and 2024.
“Lower-priced new vehicle options are beginning to place pressure on the used vehicle segment, where relative value has historically supported demand,” Sithole warns.
He adds that, from a motor finance perspective, the trend is not without upside, as greater market affordability can support credit demand, stimulating activity in a sector that has remained under pressure.
“While the financing story may be constructive, the broader economic and industrial implications deserve more scrutiny,” says Sithole.
The local automotive industry is not simply a consumer-facing market, but rather a strategically important manufacturing sector, a major employer, exporter and industrial contributor.
That is why Sithole notes that pressure on the domestic market has implications well beyond showroom floors.
“The concern is not that Chinese brands are entering the market; the real concern is whether South Africa’s domestic automotive base is sufficiently competitive to absorb this shift without a meaningful erosion in local industrial capacity,” he says.
Finding the right interventions
As a result of the growing pressure that Chinese manufacturers are placing on South Africa’s automotive industry, government intervention may be necessary.
Sithole explains that while tariffs may seem like a reasonable way to level the playing field, import duties represent a blunt instrument, and these often create as many problems as they solve.
“Higher duties may offer temporary relief to domestic producers, but they would also raise costs for consumers, particularly lower- and middle-income households already facing strained affordability,” he says.
“They could reduce competitive discipline in the market, shield structural inefficiencies and delay the very adaptation that the industry ultimately needs.”
Ultimately, in the absence of broader competitiveness reforms, these tariffs could become a defensive policy response instead of a strategic one.
South Africa’s automotive competitiveness is determined by broader constraints, including logistics inefficiencies, port bottlenecks, electricity insecurity, input costs, localisation challenges and a higher cost of doing business.
Sithole says that these are not problems that can be solved at the border, and instead highlight why the rise of Chinese imports is less a problem in itself than a symptom of a larger challenge.
“South Africa’s domestic industry is being exposed to a more demanding and more competitive global market, and policy can no longer rely on inertia,” he notes.
“That does not mean the government should be passive. It does mean the response should be more thoughtful than blanket protectionism.”
Sithole says the more credible policy approach should focus on preserving the consumer benefits of competition, while strengthening the domestic industry’s ability to compete.
“The temptation will be to reach quickly for tariffs. But if the response is limited to import duties alone, South Africa risks protecting yesterday’s structure at the expense of tomorrow’s competitiveness,” he adds.
“The better response is harder, but ultimately more sustainable, improving the domestic industry’s ability to compete rather than simply trying to insulate it from competition.”
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