Chinese and Indian carmakers are reshaping South Africa’s auto market as consumers shift toward lower-priced vehicles. Brands such as Chery and Great Wall Motor have gained market share as weak economic growth and rising living costs push buyers toward budget models.
Chery entered the market in 2021 and has already become the second-largest car seller in the country after Toyota. The company’s sales include vehicles under its Omoda, Jaecoo and Jetour brands.
Indian manufacturers are also expanding. Mahindra & Mahindra is increasing production capacity in South Africa, while Tata Motors has returned to the market after several years.
The rise of new entrants is affecting established manufacturers from Europe, Japan and the United States.
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Mercedes-Benz is considering sharing its assembly plant in East London with Great Wall Motor to maintain production levels.
The German company has exported C-Class sedans from the plant to the United States for nearly three decades under the African Growth and Opportunity Act, which allows certain African exports to enter the US duty free.
However, trade tensions and policy changes could affect export access.
South Africa’s auto industry faces other pressures. Rising production costs, slow domestic demand and changes in global vehicle markets are affecting manufacturers.
Local production has declined over the past two decades. Only about 1 in 3 cars sold in South Africa are produced domestically, compared with 56% two decades ago.
Automakers have urged the government to introduce policies that support local manufacturing and expand the domestic market.
Key Takeaways
South Africa’s auto industry is undergoing structural change as lower-cost manufacturers gain market share and traditional exporters face new pressures. Weak economic growth and declining purchasing power are pushing consumers toward budget vehicles, creating opportunities for Chinese and Indian brands that compete on price. At the same time, global trade uncertainty, including potential tariffs and policy changes in export markets such as the United States, threatens a key pillar of South Africa’s automotive sector. The industry has historically relied on export programs and government incentives to maintain production. However, rising costs and the global shift toward electric vehicles are adding new challenges for manufacturers. As new entrants expand and established companies reassess local production strategies, South Africa’s role as a regional manufacturing hub is entering a period of adjustment that could reshape the structure of its automotive sector.
