Chinese cars forcing South Africa into an uncomfortable choice
JOHANNESBURG — South African motorists are increasingly choosing Chinese vehicles for a straightforward reason: they believe they are getting more car for their money. But the rapid shift towards brands such as Chery, GWM, BYD, Jetour, Omoda and Jaecoo is creating a much more uncomfortable question for the country: what happens when the vehicle consumers increasingly want is imported, while the one they are walking away from supports thousands of South African manufacturing jobs?
That tension erupted into an unusually revealing debate among South African executives and motorists after businessman and Inospace CEO Rael Levitt compared his new Chinese built iCAUR with Volkswagen’s future in South Africa.
Levitt said he paid less than R590,000 for the vehicle and argued that its technology compared favourably with a considerably more expensive German designed vehicle parked alongside it. His experience led him to question whether Volkswagen’s Kariega operation can produce vehicles capable of competing with Chinese manufacturers on technology and price by the end of this decade.
The timing made the argument particularly pointed. Volkswagen has just celebrated 75 years of manufacturing in South Africa, with President Cyril Ramaphosa and Volkswagen Group CEO Oliver Blume among those attending the anniversary celebrations at Kariega in the Eastern Cape.
Volkswagen’s history in the country is substantial. The first locally manufactured Beetle left the Uitenhage production line on 31 August 1951. Since then, the plant has manufactured nearly 40 models and more than 4.8 million vehicles.
The company is now investing R4 billion in preparing Kariega to manufacture its new Tengo compact SUV from 2027 alongside the Polo and Polo Vivo. The vehicle will be sold locally and exported to other African markets.
Ramaphosa described that investment as a vote of confidence in South African workers and the country’s manufacturing capabilities.
But events thousands of kilometres away from Kariega demonstrate why Volkswagen’s next South African chapter may be considerably more difficult than its previous 75 years.
Days after the anniversary celebrations, Volkswagen’s supervisory board approved its Future Plan 2030, one of the most extensive restructurings in the company’s history. The plan includes about 50,000 additional job reductions, on top of previously agreed workforce cuts, while Volkswagen intends to halve its model portfolio by 2035 and dramatically reduce product complexity.
The company is responding to weakening profitability, excess European manufacturing capacity and increasingly intense competition from Chinese manufacturers.
That competition is no longer something South Africa has to anticipate. It is already happening in dealership showrooms.
Chery sold 2,763 passenger vehicles in South Africa during August, giving it 6.7% of the passenger vehicle market and placing it fourth in that segment. GWM recorded 2,594 total vehicle sales during the month, while Jetour sold 1,952.
Volkswagen remains considerably larger. Volkswagen Group Africa, including Audi, recorded 5,668 South African sales in August and ranked third overall behind Toyota and Suzuki.
The significance lies in how quickly the competitive landscape underneath those rankings is changing.
Chinese manufacturers are increasingly attacking several parts of the market simultaneously, offering conventional petrol vehicles alongside hybrids, plug in hybrids and fully electric models while competing heavily on standard equipment, cabin technology and pricing.
Levitt argued that this has changed the basis on which consumers compare vehicles.
“Whatever the ten year game plan is for VWSA, it has to beat the car sitting in my garage. Right now, it does not,” he wrote.
The response from other South Africans suggests that this is not an isolated perception.
Public relations strategist David Aladegbaiye Patricks, who said he had been involved in the launch of several of the newer automotive brands, described a similar experience after driving the BYD Seal.
“The argument that Chinese brands cannot compete on quality no longer holds,” he wrote. “Consumers are seeing the value and shifting their buying power towards Chinese brands.”
Another motorist, Willem Gous, said he was preparing to buy a Chinese vehicle because the combination of quality, equipment and price had become difficult to ignore.
But other participants in the discussion identified the other side of the equation, and it is where the issue becomes considerably bigger than consumer preference.
Volkswagen is not simply another vehicle badge competing for South African sales. Kariega is part of a manufacturing and supplier ecosystem built over decades, supporting thousands of direct and indirect jobs and generating significant exports.
Nobel Mandaza, an industrial technology executive, questioned why South Africans should automatically favour an imported Chinese vehicle purely because it offered stronger technology or pricing when German manufacturers had spent decades developing manufacturing plants, suppliers, apprenticeships, graduate programmes and technical capabilities inside South Africa.
It exposes a difficult economic contradiction.
Consumers make purchasing decisions using their own money. They cannot reasonably be expected to pay substantially more for a vehicle they consider less competitive simply because the alternative supports local industrial policy. But if enough consumers reach that conclusion, South Africa risks weakening precisely the manufacturing base it wants to protect.
Chinese manufacturers are also beginning to complicate that distinction by investing locally. Chery has taken over the former Nissan manufacturing facility in Tshwane and plans local production, meaning the competitive discussion will increasingly become less about China versus South Africa and more about which manufacturers are prepared to produce competitively inside South Africa.
The pressure is not coming only from South African consumers.
Chinese vehicle exports surged 77.5% year on year in August to 894,000 units as manufacturers increasingly looked overseas while domestic Chinese passenger vehicle sales weakened. Exports of electric and plug in hybrid vehicles rose even faster.
That creates formidable competition for manufacturers in markets such as South Africa.
There are nevertheless areas where established manufacturers retain advantages that price lists and touchscreen sizes do not immediately reveal.
Several participants in Levitt’s discussion raised questions about long term reliability, resale values, replacement parts, dealer coverage and aftersales support. These are particularly important considerations for consumers financing vehicles over five or six years.
Safety produced another important challenge to the value argument.
Executive Bryan Berger cautioned that safety equipment can differ between Chinese vehicles sold in different markets and argued that consumers should compare the safety specification of the exact South African model rather than relying on an overseas crash rating for another version.
These concerns mean the Chinese challenge is not settled. What has changed is who now has something to prove.
For years, Chinese manufacturers had to convince South Africans that lower prices did not automatically mean inferior vehicles. Increasingly, established manufacturers must convince consumers why their heritage, dealer networks, resale values and manufacturing presence justify the price difference when competing vehicles arrive with extensive technology and equipment.
Volkswagen’s Tengo will be one of the most important tests of that proposition.
It is not simply another SUV launch. The vehicle represents a R4 billion bet that Volkswagen can use South African manufacturing to build a competitively priced vehicle for this market and the rest of Africa while protecting the economics of its Kariega operation.
And Kariega matters far beyond Volkswagen.
South Africa wants to remain an automotive manufacturing country. It wants investment, exports, component manufacturing, engineering skills, apprenticeships and jobs. At the same time, its consumers are increasingly being offered imported vehicles that challenge established assumptions about how much technology and equipment their money should buy.
Protecting local manufacturing cannot therefore depend indefinitely on asking motorists to accept less value in exchange for economic patriotism.
Levitt reduced that industrial challenge to the comparison sitting in his garage. Volkswagen has spent 75 years building one of South Africa’s most important automotive manufacturing operations. The question for its next decade is whether the locally built car can become compelling enough that South Africans choose it without needing to be reminded why they should.
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