Chinese, used cars benefit in declining market - NADA

Sales statistics published by automotive business council, naamsa, highlight a shift towards Chinese-manufactured vehicles, which is being driven by competitive pricing, quality and high-tech specifications, says the National Automobile Dealers' Association (NADA).

Nabeel syed Jk3 Uhdwjcs unsplash

Brandon Cohen, the chairperson of NADA, says this trend is reshaping the competitive landscape, posing challenges for traditional premium dealerships.

“The premium segment is under pressure, with customers shifting from new vehicles to demos and pre-owned cars. Some loyal premium brand customers extend maintenance plans, but the majority are either buying down, waiting or transitioning to pre-owned vehicles, leading to significant growth in the pre-owned car market compared to new cars,” he says.

Cohen says the local market is becoming increasingly competitive, with a growing number of Asian participants while Chinese brands are making a significant impact in both the passenger car and overall truck markets.

"We observe a trend of consumers downsizing and conducting extensive research into pricing and financing options. Affordability remains a crucial factor in purchasing decisions. South Africans are increasingly turning to more budget-friendly vehicles owing to economic challenges, high interest rates and escalating fuel costs.

“Market dynamics, influenced by economic conditions and changing consumer preferences, are causing a re-evaluation of traditional brand loyalty. Consumers are adapting to budget-friendly options, including Chinese-manufactured vehicles, marking a significant shift in the industry landscape,” he says.

Cohen adds that there are some positive aspects to the new vehicle sales statistics for February 2024 despite the total market declining by 0.9% year-on-year to continue the declining sales trend that commenced in August 2023.

He says February 2024 was another challenging month for South Africa's motor industry as economic pressure and political uncertainty continue to impede growth.

Cohen says the new vehicle market, totalling 44 749 unit sales, faced headwinds from the recent fuel price increase and the anticipation of another hike next week while the Budget further strained consumer pockets, which was compounded by the looming general election.

He says the Reserve Bank Governor’s statements on maintaining high interest rates have added to the prevailing negative sentiment.

“Despite these challenges and passenger car sales dipping by 3.1%, there are some positive aspects. Light commercial vehicles experienced a 2.5% growth, the heavy truck market showed robust demand with a 14% month-on-month increase and dealer sales accounted for 37 913 units, or 84.7% of total sales, indicating some consumer appetite, supported by dealership incentives," he says.

More Industry News stories

LDV expansion opens more opportunities for dealers

LDV expansion opens more opportunities for dealers

With their second and third shipments on their way, the newly introduced LDV already has vehicles ready for their first customers. The company is also well on its way to establishing a dealer network across the country and still has availability for dealerships in certain areas.

  • 17 April 2024
Nissan Navaras arrive in Zimbabwe

Nissan Navaras arrive in Zimbabwe

Nissan Zimbabwe spokesperson, Lucas Taruvinga, Amtec Motors CEO, has welcomed the Nissan Daring Africa 2024 expedition team to Zimbabwe. The crew, in their four Nissan Navaras and X-Trail support vehicle, are well into their eight-country odyssey across Africa.

  • 17 April 2024