South African motorists are increasingly opting for affordable Chinese vehicles over German luxury brands like BMW, Mercedes, and Audi.
Nedbank’s vehicle and asset finance division, MFC, reports that the rise of Chinese car brands is reshaping South Africa’s automotive market, offering consumers more choices at competitive prices.
Brands like Chery, Haval, GWM, and BYD are gaining traction, with MFC projecting that Chinese vehicles will account for about 20% of new car sales by next year. While traditional German luxury brands such as BMW, Mercedes, and Audi have been hit hard, Chinese automakers are competing across all segments, from hatchbacks to luxury SUVs and electric vehicles (EVs).
Haval, owned by GWM, has seen strong growth with its SUV lineup, while BYD has introduced budget-friendly EVs like the Dolphin. According to MFC, Chinese cars appeal primarily due to their affordability, offering high-quality vehicles at lower prices than Western and Japanese brands. This is especially attractive in South Africa’s challenging economic climate, where many consumers are seeking better value.
Beyond pricing, Chinese brands are also competitive in technology and luxury, integrating features like autonomous driving, connectivity, and advanced safety systems. As they expand their model lineup and dealership networks, MFC expects their market presence to grow.
However, these brands still face challenges in building trust, as concerns about build quality persist. Long-term success will depend on strong after-sales support and improved customer confidence.
At the same time, German luxury brands are under increasing pressure. Rising debt levels and high interest rates have reduced disposable income for middle-class South Africans, limiting their ability to afford premium vehicles. Wealthier buyers are also holding off on new car purchases or opting for more affordable models.
Higher interest rates have made car financing more expensive, further discouraging purchases. This has led to a significant decline in German luxury car sales over the past decade. Audi, for example, saw its annual sales drop from 18,375 in 2014 to just 6,259 in 2023. BMW and Mercedes have also suffered, with only VW-owned Porsche managing to buck the trend.
Earlier this year, Daily Investor reached out to Audi, Mercedes-Benz, and BMW for insight into their declining sales. BMW acknowledged that the entire passenger car market has contracted over the past decade due to rising living costs. A growing trend of “buying down” has emerged, where consumers either choose more affordable vehicles or delay upgrading their cars.
Audi echoed this sentiment, noting that the overall premium market has shrunk. However, it highlighted that despite lower sales, it has managed to maintain or even grow its market share in some years.
Many South Africans are now holding onto their cars longer, waiting seven to eight years before upgrading instead of the typical five-year cycle. Combined with an influx of affordable imports from Asia, consumers have more choices than ever, further challenging the dominance of German luxury brands in the country.
