Chinese brands that have thrived since returning to SA
Some brands that left the South African market are returning… There was little sadness when they departed, but now that they’re back, they have MUCH better cars.
Comebacks rarely live up to expectations, but for some car companies, it has been rewardingly profitable to return to the South African market.
After leaving in the 1980s and returning in the late 1990s, Renault has navigated its aftersales issues and finally blended the appropriate product matrix for local conditions: the Duster and enticingly affordable Indian-sourced models. If you leave bakkies out of the equation, Renault is the country’s 3rd biggest car brand in terms of new-vehicle sales.
Suzuki has done even better since returning in 2008 and although it took a while to really hit its straps, the brand now consistently sits near the sharp end of South Africa’s top-selling car brands list (according to Naamsa’s monthly sales stats).
And then there are the Chinese brands. There was a period in the late Noughties when South Africa was nearly experiencing a Chinese brand introduction each month. Most of these were awful continuation bakkie models, loosely based on 1980s Japanese bakkies.
The Chinese reality check has happened
This is how things started for Chery, in South Africa. With the rather poor QQ3…
Nearly all the Chinese brands failed in South Africa, but GWM endured and eventually found massive success with its SUV sub-brand Haval. And that’s triggered a lot of interest from some other Chinese car companies.
The South African car market has consistently shrunk since its peak of 714 340 units in 2006. Projections for this year are a market of 505 000 cars. It’s not a happy story. South Africa’s population has grown, but the demand for new vehicles has not kept pace with demographics. The regression of new vehicle sales is directly attributable to a gradually eroding economy, wage stagnation and obliterated purchasing power.
Despite a shrinking market, some brands that disengaged from South Africa are keen to return. Who are they? And, perhaps more pointedly, why?
Chery on top
Chery’s SUVs have been transformative for the brand in the South African market.
The most notable Chinese reintroduction to South Africa has been Chery. In 2008, when Chinese brand mania was sweeping across South Africa, I visited the company’s original R&D facility near its headquarters in Wuhu.
Young Chinese engineers, somewhat shy but not inherently awkward in their spoken English, were clearly benchmarking European and American standards when I observed them 14 years ago. At the time, it was a very divergent approach from what was assumed of Chinese technical teams, who had established a reputation of merely imitating exterior design and using the cheapest components to achieve cost goals.
In 2018, Chery opened an advanced European R&D facility in Frankfurt. The location was not accidental, with Chery being very transparent in its desire to leverage German engineering talent to identify the best value components within the country’s enviable automotive component supply chain. Ironically, 2018 was also the year in which Chery quietly ceased operations in South Africa…
Not only price – the cars have become much better
During Chery’s initial misadventure in South Africa, it had no stellar products. Or even average ones, for that matter. The QQ compact hatchback was an awful Daewoo Matiz clone. But when Chery returned in November last year with its new-generation Tiggo SUV range, the potential I saw among those junior engineers back in 2008 had been realised.
The Tiggo range has been expanded from the Tiggo 4 Pro to the 7 Pro and 8 Pro, and market reaction has been overwhelming. August 2022’s new-vehicle sales statistics rank Chery as South Africa’s eighth biggest vehicle brand.
What’s changed? South Africans have not become wealthier since 2018 when Chery left the country. The change has been greater technical expertise and product maturity, not to mention better marketing confidence, with Chery’s SUV strategy being ideal for the South African market.
Instead of attempting to undercut the excellent value offered by Korean compact hatchbacks from Hyundai (i10) and Kia (Picanto) or even the VW Polo Vivo, Chery’s gained traction in the higher-margin market for crossovers and SUVs, priced between R300 000 and R500 000.
Proton is Geely’s Trojan horse
The real reason Geely spent money on Proton (and Lotus).
What is the best car quiz question if you want to confuse hot hatch know-it-alls? Name the rarest hot hatch. That would be the Proton Satria Neo R3 Lotus Racing, of course.
For many years Proton was a nearly undetectable presence in the local market. Buoyed by immense petrochemical revenue income, the Malaysian government has been keen on diversifying its economy with broader industrialisation. And creating consumer products, such as automobiles, was foundational in that strategy.
The Satria Neo might have been an underwhelming average car, but it had a brand association that VW Polo GTI and Clio RS owners could only dream of: Lotus. From 1996-2017, Proton owned the British car company, and more importantly, its incredibly valuable engineering consultancy – renowned for having helped some of the world’s most established brands engineer their best road cars.
Recognising the value that has been unlocked with its purchase and ownership of Volvo, Geely bought the controlling share in Lotus from Proton, in which it also holds nearly half the equity. Why? Geely wanted to leverage the technical expertise within its acquired European brands (Lotus and Volvo), to bring European calibre refinement to its vehicles.
How does that play out for South Africa? Geely is the most significant Chinese brand without a direct presence in South Africa and Proton will function as a proxy in that role. After leaving South Africa in 2015, Proton returns with its X50 and X70 SUVs this month.
Powered by 1.5-litre 3-cylinder turbopetrol engines and featuring 7-speed dual-clutch automatic transmissions (you might recognise them as the same units that power the Volvo XC40 T3), these Proton X-Series SUVs are built on Geely’s best internal-combustion vehicle platform.
What about the biggest Chinese car company, SAIC? That’s MG…
MG’s ZS EV has 320 km of range and costs only R520 000 in Australia. Imagine how it could change the South African BEV market…
In the mood for some more nearly unbeatable car quiz trivia? What was South Africa’s first crossover? Really. No, whatever you guessed is wrong.
Yes, it was the terrifically named MG Streetwise, marketed rather unsuccessfully in South Africa without any legal action from KFC.
MG has been perhaps the most unfairly troubled of all British automotive brands. And there is no shortage of troubled British car companies: Aston Martin, Jaguar, Lotus, McLaren, TVR and many names now consigned to history. But MG’s different. Aside from the quite awful MG Streetwise, the MG TF was an authentically fun mid-engine value sportscar, deserving of greater success if not for the presence of Mazda’s MX-5 and the Toyota MR-2.
But MG has reinvented itself and become more, um, streetwise. After the last British-built MG rolled out of the brand’s Longbridge facility in 2016, the company transformed. Being acquired by the biggest Chinese car company, SAIC, will do that.
With perhaps the best automotive acronym and a decent brand legacy, MG’s revival has been remarkable. In South Africa’s global mirror market, Australia, the rejuvenated MG brand is a top-10 sales performer. And much like resurgent Chery and Proton, it is all about offering compact and mid-sized crossovers and SUVs.
MG markets 2 core models: HS and ZS. And like the latest South African market product from Chery and Proton, these are compact crossovers and SUVs. MG disengaged from South Africa in 2016, but considering its success in Australia, a return to the local market would seem logical. Especially, with the promise of MG’s double-cab bakkies.
Will these returning brands bring pricing down across the market?
MG’s Extender bakkie could add another value option to local buyers.
What does all of this mean for you, the average South African consumer, who’s evaluating that R300 000 to R500 000 product choice? Quite a lot, actually.
The local market is getting smaller and Chinese brands are crowding it with compelling models offered at tremendously keen prices.
There is a kernel of truth in the assumption that Chinese brands, especially those who are returning to the Republic, are doing what Hyundai and Kia did in the late 1990s and early 2000s – essentially buying market share with artificially low pricing. But that’s a clever strategy when you know the future product pipeline will be on a trendline of improvement, allowing you to retain customers initially conquered by an exceptional value offering.
For car buyers, it is a big win: More choice and better specification, at keener prices than what long-entrenched manufacturers command for comparable products. The return of Proton and MG, allied to Haval and Chery’s significant market share, will force South Africa’s legacy car brands to re-evaluate their strategy, adjusting price or specification to enhance their offerings in the R300 000 to R500 000 price range.
Who loses in all of this? If you are an Asian brand that happens to be a pure importer, without the benefits of local manufacturing to offset some tariff costs with government incentivised credits, doing business is becoming much tougher.
And the other losers? Could be those very committed longstanding MG Streetwise and Proton Satria Neo hatchback owners, because we doubt that re-established MG and Proton dealers will have the servicing resources you need to keep your modern “classic” going.
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