Cheap Chinese vehicles are reshaping SA’s car market, forcing retailers like Motus to retrench workers and rethink their business models.
SA’s motor retail sector faces an uncertain future, constrained by rising demand for low-cost, high-quality Chinese car imports that have flooded the market, impacting sales of local retailers.
At least one retailer, Motus, is retrenching at least 86 employees, a figure cut down from more than 200 initially announced by the group. A further 579 are impacted by changes to remuneration and benefits.
The group cited changes in its remuneration and benefits, attributed to competition from Chinese vehicle sales that have become popular with local buyers.
Cheap Chinese vehicles are reshaping SA’s car market
Last year, Motus gave a Section 189 notice to the Motor Industry Staff Association about its plan to retrench.
The group linked the job cuts to market pressures from Chinese car brands and also cited efforts to restructure the business.
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Motus’ decision coincided with the Chinese vehicles outselling both luxury car giants, BMW and Mercedes-Benz, in South Africa.
However, despite this, the motor industry looks a lot better this year compared to the previous year because figures point to some recovery, analysts said.
This was echoed by the sector itself, following last year’s commendable results.
Naamsa optimism about this year’s prospects
In a statement, Naamsa South Africa expressed optimism about this year’s prospects for the sector, after the new vehicle market delivered a landmark performance last year, finally recovering above the 2019 pre-pandemic levels and hitting highs not seen in a decade.
The strong conclusion to the year saw new vehicle sales reaching 48 983 units, a rise of 7 882 vehicles last December, compared to the 41 101 units recorded in December 2024.
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But the sector is still reeling from the challenge posed by Chinese vehicle imports, attracting a cross-section of consumers due to their cheap price tags that come with luxury.
Recent reports said that since hitting the local shores, Chinese vehicles have given the South African market a run for its money – coming up with value-for-money products and offering luxurious models ready to take on the heavyweights.
Top Auto Online reported that BMW and Mercedes-Benz, the pinnacle of luxury in South Africa for decades, offering everything from flashy sports cars to premium SUVs, were outperformed by Chinese vehicles.
BMW and Mercedes-Benz outperformed by Chinese vehicles
“Now, Chinese brands are offering the same things at much lower price points, for what seems to be comparable value. Not only that, but these brands have already surpassed the big guns in the monthly sales figures.”
The publication cited the Automotive Business Council Naamsa’s data for November: new car sales show Chery, Omoda, Jaecoo, and Jetour were ahead of Mercedes, while BMW was beaten by both Chery and OJ, narrowly outselling Jetour.
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The BYD is another vehicle that gives local brands sleepless nights as it seems to interests the SA market. BYD Auto South Africa managing director Steve Chang said the brand will hit its target of around 35 dealerships in SS by the first quarter.
Political economy analyst Daniel Silke said from a retail sales perspective, the industry is surprisingly healthy. The last quarter’s sales have been substantially better, and the figures point to a modest uptick in the economy.
“The motor industry looks a lot better, and when that happens, it’s a reflection of a slightly stronger economy. The GDP figures look a lot better, but there is room for improvement,” Silke said.
Cosatu concerned about possible job losses and salary cuts
Union federation Cosatu expressed concern about possible job losses and salary cuts to hundreds of workers in the sector.
Its parliamentary coordinator, Matthew Parks, said the cut would worsen the “already painfully high unemployment rate of 42.4%”.
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“The federation is worried that Motus may retrench hundreds and slash the wages and benefits of even more. We urge the employer to return to the negotiating table and engage with workers and their unions in good faith to find progressive solutions and fair alternatives,” he said.
