Big trouble for BMW and Mercedes-Benz in South Africa

New data from analytics group Lightstone shows a big shift among vehicle brands in South Africa – one which it says could be permanent.

Looking at the top ten vehicle brands in the country over the past 15 years, the group highlighted that a few new brands have broken into the top reaches thanks to a high number of sales, while other brands have fallen out of favour.

Notably, Renault and Kia have broken into the top ten in recent years and have remained some of the most popular brands.

BMW and Mercedes Benz, however, have dropped out of South Africa’s top ten car brands.

“As the quality of the more affordable vehicles continues to improve, these brand shifts could become permanent,” Lightstone said.

Toyota and Volkswagen remain the country’s favourite brands and have maintained the top positions for 15 years.

Suzuki “came from nowhere” in 2018 to claim the third spot in 2022, nudging Hyundai back to fourth place, just a year after the South Korean brand moved to third.

Renault shot into the top ten in 2014 and is now in the seventh spot. Kia debuted in the top ten in 2016 and is now eighth.

Other new entrants include Chery and Haval. These brands are among the more affordable vehicles from China and South Korea, the analytics group noted.

BMW, which was the eighth most popular vehicle brand in South Africa by sales in 2009, dropped out of the top ten in 2019. Mercedes-Benz, which was the sixth most popular brand in 2009, dropped out in 2020.

Another popular premium brand, Audi, has only ever been in tenth position but fell out of the list in 2014.

According to Lightstone, the market shifts reflect tough economic conditions, which have dampened consumer spending and led to lifestyle changes.

Consumers have had to adapt to the changing landscape—and this has been done by pricing down.

Lighstone noted that South Africa’s total new vehicle sales of 393,405 in 2009, just after the financial markets crash, were the second-lowest recorded in the past 15 years, marginally ahead of the 389,205 sales in 2020, the year COVID-19 wreaked havoc.

While the market did recover after 2009, to above 600,000 sales a year between 2012-2015, consumer appetite softened ahead of the pandemic, drifting down to 536,604 in 2019.

“Today, sales have recovered to around the same territory (531,787 in 2023) and any further upward mobility will depend on an improving domestic economy.

“All signs indicate that there will be some small interest rate relief from the South African Reserve Bank this year, although government policy may shift as the country adapts to the 2024 election results.

“Until things change, we can expect to see consumers continue to be under pressure and most likely continue to price down,” it said.

Rise of the Chinese

National Automobile Dealers Association (NADA) has noted a trend of consumers downsizing and turning to the growing number of Asian participants—particularly Chinese brands—which are making a significant impact in the market.

The buying-down trend can be seen in the strong growth of sales from cheaper brands such as Suzuki and popular Chinese brands, including BAIC, Beijing, Chery, GWM, Haval, Jaecoo, and Omoda.

Over the last four years alone, the cars listed above (with many only entering the market within the last couple of years) increased sales from 7,611 in 2020 to 30,850 as of 2023—a 305% increase.

Haval and Chery have been the main drivers of this trend. Naamsa’s data shows that Havel has sold approximately 19,904 units, representing an increase of over 2,000% from the 872 recorded in 2019. Chery’s sales are likely to be in the same region.

Suzuki has also been a notable participant, having seen immense growth in the past decade. Sales of its vehicles grew from 6,402 to 47,201—a 637% increase.

Read: R308 per month relief for car owners in South Africa is coming