JSE’s vehicle groups face China ¢risi$ (or opportunit¥)

In South Africa and elsewhere, Chinese vehicles were until recently viewed with scepticism by consumers and industry insiders alike. They have now shifted from a marginal presence to a credible force across multiple segments. An initial trickle of budget-focused models from brands including Chery, GWM and BAIC has expanded into a broad stream. The increasingly sophisticated lineup spans compact city hatchbacks, SUVs, bakkies and, more recently, electric vehicles (EVs).

 In the process, Chinese automakers have steadily eroded the dominance of established players, increasing their share of new vehicle sales from about 2% in 2019 to a significant 14% by July 2025. This figure probably understates their true reach because some manufacturers do not report sales to Naamsa. The question is no longer whether Chinese brands can secure a foothold in this country but how far their market share will expand — and what that will mean for incumbent players in the local automotive value chain.

In some respects, the Chinese “invasion” is following the Korean script. When Hyundai and Kia entered the South African market in the 1990s, they were met with no small measure of scepticism. Many buyers saw them as cheap, no-frills imports that couldn’t match the perceived quality of established Japanese and German marques.

Early resale values were poor, and doubts about long-term durability lingered. But they invested heavily in improving build quality, extending warranties and building nationwide service networks with responsive after-sales support. The result was a steady shift in public perception. These once-derided newcomers are now among South Africa’s top-selling nameplates, competing head-on with Toyota and Volkswagen in passenger cars and SUVs.

Of course, a shift towards greater Chinese vehicle penetration — and, potentially, more affordable EVs over the long term — is not without consequences for South Africa’s listed automotive groups.

Motus Holdings is leaning into the surging appetite for Chinese cars, but the opportunity comes with built-in limits — and a margin risk that investors can’t ignore. CEO Ockert Janse van Rensburg told investors in June that the group now has 13 dealership sites representing nine Chinese brands — BAIC, Chery, GWM, Haval, Jetour, Omoda, Jaecoo, MG and LDV — accounting for 18% of its “non-importer” new vehicle sites. These outlets operate on a multifranchise basis, selling brands Motus does not import.

Even so, Motus’s core importer portfolio still controls the vast majority of sites and underpins most of the group’s revenue. Hyundai, Kia, Renault and Mitsubishi are handled exclusively by Motus at the wholesale level, allowing it to capture margins from both wholesale and retail. About 70%-75% of these importer brand sales pass through Motus-owned dealerships, making them materially more profitable than other brands.

Chinese carmakers, like many other original equipment manufacturers (OEMs), generally avoid exclusive distribution arrangements. Chery, for instance, operates its own South African wholesale arm, limiting Motus’s role to retail sales. Janse van Rensburg says this doesn’t create a conflict of interest with Motus’s higher-margin importer brands, because the two divisions are run separately: “Our importer business is separate from our retail operations. When we engage with new OEMs, we can offer them primary sites in good locations that immediately give their product traction.”

The problem is capacity. “We would typically not have too many multifranchise sites where we could put [Chinese brands] next to our importers,” Janse van Rensburg conceded, noting that Hyundai sites are standalone and most importer outlets are already paired with other importer brands.

That leaves a pool of just 70-80 sites where Chinese brands can realistically be added.

The risk is that if Chinese brands start winning market share from Hyundai, Kia and the rest, Motus could be squeezed from both ends — selling fewer units and earning a lower blended margin on the ones it does sell.

To counter this, Motus is diversifying into the budget segment by leveraging its exclusive importer rights to Indian Tata models. From this month, Motus will introduce Tata’s affordable Tiago hatchback (starting under R200,000), along with the Punch compact SUV (priced below R250,000), the Curvv, said to be a coupé-inspired SUV, and the range-topping Harrier SUV. Over time, Tata aims for a 6%-8% market share in South Africa with expansion to 60-70 dealerships by 2026.

Fellow JSE-listed auto retailers CMH and Super Group are less dependent than Motus on the high-margin exclusive importer distribution model. But their “foundational” marques — for CMH, that includes Ford, Nissan and Volvo — are not immune to the competitive squeeze from aggressively priced Chinese entrants. The sheer proliferation of new nameplates also fragments consumer attention and forces more marketing spend to maintain visibility.

Swapping a dealership over to a new brand when an established one loses relevance is no small undertaking. It requires substantial investment in showroom refits, brand-specific signage, staff retraining, marketing collateral and stocking a full pipeline of parts and service equipment. Those costs can erode returns for several years before the new brand gains traction.

Second-hand car retailer WeBuyCars, as a brand-agnostic operator, is arguably the least exposed to disruption from the Chinese onslaught. In fact, the availability of nearly new Chinese models — particularly the popular Chery and Haval SUVs — could create a fresh pipeline of competitively priced stock for value-focused buyers.

The group is also far less vulnerable in the aftermarket, where cheaper Chinese parts are squeezing margins, or in the longer term from the structural shift towards EVs. EVs require significantly less maintenance than internal combustion engine (ICE) models: no oil changes, far fewer moving parts, and regenerative braking systems that dramatically extend brake life. Service intervals are longer, and lucrative revenue streams from consumables such as exhaust systems, clutches and timing belts disappear entirely.

China is by far the world’s biggest producer of EVs, thanks to aggressive government support

For dealer groups such as Motus and CMH, where service, parts and accessories contribute a large share of gross profit, a move towards Chinese EVs could erode some of their highest-margin business lines.

The shift wouldn’t happen overnight — EVs still account for less than 1% of new car sales in South Africa. But if low-cost Chinese EVs tipped the market into the mainstream, the traditional service model would face real disruption. To defend profitability, companies would need to pivot towards higher-value activities such as software updates, battery health diagnostics and aftermarket charging solutions.

China is by far the world’s biggest producer of EVs, thanks to aggressive government support.

South Africa’s used car market should remain resilient for years, supported by the sheer size of the existing ICE vehicle parc and the slow pace of fleet renewal. But pricing pressure is an emerging risk in specific segments.

In markets such as Australia and Mexico, the arrival of new Chinese vehicles priced close to three- or four-year-old Japanese or German models has effectively capped resale values for those older cars. The same dynamic could play out locally, creating headaches for Motus, CMH, Super Group and WeBuyCars if used inventory suddenly looks overpriced against fresh imports. On the flip side, Super Group’s fleet and supply chain divisions could benefit from replacing ageing vehicles with competitively priced Chinese models — particularly if the increasingly well-priced Chinese EVs deliver meaningfully lower running costs than ICE equivalents.

In a recent earnings call, WeBuyCars CEO Faan van der Walt repeated his view that Chinese brands could capture as much as 40% of South Africa’s vehicle market within the next five years — a view he says he now holds “even more so today”. He admitted to being surprised by the number of new Chinese brands entering the South African vehicle market and noted that they have been “very positively received” thanks to “really, really competitive” pricing.

Van der Walt said the rise of Chinese marques is already hurting established players, particularly at the higher end, saying that “the German brands have lost close to 70% market share” over the past decade. 

He cautioned, however, that the market remains crowded and confusing for consumers, with many different makes and models now on sale, not all of which will survive. “Some will come and go ... you don’t really want to buy a brand that will not exist in a year or two,” he said.

The global experience suggests that once Chinese brands achieve critical mass — typically about 10%-15% of market share — they can scale up rapidly, leveraging word of mouth and repeat purchases to entrench themselves.

With the right combination of local manufacturing, supportive policy and growing consumer acceptance, Chinese brands could dominate South Africa’s market within five to seven years.