Driving lessons from Korea

If Chinese newcomers to the South African car market want to overcome consumer doubts, they could use Hyundai as a template.

When the Korean brand arrived here in the mid-1990s — imported from a tax-dodge Botswana assembly plant — few consumers were prepared to put money into what they saw as a cheap-and-nasty newcomer. Korean cars were untried and untrusted.

What Hyundai did have was confidence in its cars, a cycle of product improvement and a long-term plan based on value for money. As most of the Chinese carmakers are still doing, Hyundai started by undercutting the prices of established brands, but added extra features and specifications without outpricing rivals.

Today, Hyundai is South Africa’s fourth most popular car, behind Toyota, Volkswagen and Suzuki. It says much for a willingness to learn that the next two are Chinese, Chery and Haval. Many others are still price-dependent for sales.

Stan Anderson, who became MD of Hyundai Automotive South Africa this week, says: “You can’t just compete on price. Someone will always come in cheaper. We are seeing a price war among some of the new entrants.”

Hyundai Automotive South Africa is owned by local group Motus — a rare example of independent import and distribution in a world where Hyundai Korea prefers direct ownership.

Anderson, 60, has worked for Hyundai since 2001, so he knows the brand inside out. He also understands Korean business attitudes. So while Hyundai, like everyone else, is feeling Chinese heat, this is not the time to be cautious. He says: “Our priority is not defending what we have; we remain a market aggressor.”

When Nissan South Africa halted production in 2024 of South Africa’s last small bakkie, the NP200, Hyundai saw a gap for a car that could be adapted to business use.

This is borne out by the fact, he says, that Hyundai sales of cars and light commercial vehicles have risen 30% this year in an overall market that has grown 10%. He says Hyundai vehicles cover 98% of the passenger car market, from entry-level to premium. It recently added a R1.25m hybrid-electric Santa Fe SUV.

He hopes the government will follow through on President Cyril Ramaphosa’s pledge to consider electric vehicle (EV) buyer incentives, but notes: “EVs generally are expensive and when it comes to SUVs, South African buyers love diesel.”

Besides importing cars, Hyundai assembles small-truck kits at a factory in Benoni and is converting hundreds of entry-level i10 cars into bakkie-esque vehicles.

When Nissan South Africa halted production in 2024 of South Africa’s last small bakkie, the NP200, Hyundai saw a gap for a car that could be adapted to business use. Anderson says of the converted i10, in which the rear seats and boot have been turned into a protected cargo area: “Our main market is technical companies and technicians with limited equipment. They don’t need an actual bakkie.”

He says annual demand for the vehicle could rise as high as 4,000. In a market where Hyundai sold 15,195 vehicles in the first five months of this year, putting it on track for an annual target of about 36,000, 4,000 is not inconsequential.

Despite the i10 conversions and small-truck assembly, Anderson insists there is no question of Hyundai building cars locally.

He says it makes no sense to build here when overseas Hyundai plants can do it much cheaper. Most Hyundais sold here are built in India.

An early lesson learnt by Hyundai, from the Botswana days, is that it pays to keep a tight grip on your marketing destiny. Of 97 Hyundai dealerships in South Africa and one each in Namibia, Botswana and Eswatini, Motus owns 43, representing 65% of sales.

“We put a lot of focus on after-sales, on supporting the customer after they buy the vehicle.” He says the local company was named global Hyundai after-sales group of the year. “After-sales service isn’t always front of mind when customers buy, but it makes all the difference down the line.”

The South African new vehicle market has grown this year, though from a small 2024 base held back by pre-election political jitters in the first half. Full-year sales in 2025 are likely to overtake the pre-Covid 2019 total of 536,486. Industry association Naamsa says the number could be 545,000.

Anderson remains cautious. Notwithstanding recovery from the depths of Covid, the new vehicle market has been on a downward trend for more than a decade.

“For the market to really recover, we need annual economic growth of 3%-5% and I don’t see that happening,” he says. “There may be a couple more interest rate cuts this year, but that’s not enough. We’re better than last year, but I think 2026, at best, will be a year of market consolidation. I’m not getting excited.”