Chinese car brands getting increasingly popular, but they better not make the mistake the Koreans made
In the cut-throat business of cars, the balance of power has been shifting eastward for more than half a century.
Back in the 1950s and ‘60s Detroit’s Big Three, who you might know as GM, Ford and Chrysler, must have seemed unstoppable with their glitzy tail fins and roaring V8s. Even if many consumers were already warming to sportier European models.
Then came the oil crisis of the 1970s and suddenly economical Japanese cars, seen as cheaply made objects of ridicule just a decade earlier, were now a thing. A big thing.
Before we could rub the crude oil out of our eyes, South Korean cars had become mainstream too and in recent years Chinese entrants have enjoyed a similar rise to fame.
Having failed to make an impact with their often poorly built and engineered cars of the early 2000s, modern Chinese products have improved in leaps and bounds to the point where they are now a real threat to the establishment.
For the most part today’s offerings from The Red Dragon offer an agreeable driving experience and a generous serving of luxury features at prices that undercut rivals from mainstream brands, sometimes by a significant margin.
They’re not without quirks, with some accused of having fussy infotainment systems and poorly mapped engines, and because they haven’t been around for long enough to prove their longevity, many car buyers remain sceptical.
But you must admire Chery’s boldness for offering a 10 year or one million kilometre engine warranty for first owners.
These local importers like to shout “the Chinese are here!” at every opportunity they get. But how “here” are they really when it comes to actual sales performance?
In 2023, two Chinese products made it into the passenger vehicle top 10, with the Chery Tiggo 4 Pro taking seventh place and the Haval Jolion scooping ninth. What’s really interesting is that the Chery topped the compact SUV class.
Priced from R279,900 following the introduction of the LiT base model late last year, the Tiggo 4 continues to dominate its segment in 2024, with first quarter sales stats showing a dominant lead.
Some 2,853 of them found homes from January to March, putting it well ahead of the Nissan Magnite (2,158), Toyota Urban Cruiser (1,694) and Kia Sonet (1,588).
If we move to the medium–sized SUVs, the locally-produced and keenly priced Toyota Corolla Cross is still the runaway best-seller.
Everything else in that category is losing ground to the Chinese brands, with the even more affordable Haval Jolion taking second place in the first quarter of 2024 with 1,630 sales and the Chery Tiggo 7 Pro completing the podium at 1,060.
The Jolion is priced from R348,900, while the Tiggo 7 starts at R442 900.
The Volkswagen Tiguan rears its head in fourth, with 547 sales in Q1, but it only narrowly beats China’s Beijing X55 (551) and Chery Tiggo 8 Pro (547). And it takes just one glance at the Tucson, Rav4 and CX-5 numbers to see how the mighty have fallen in this category.
Omoda, which has not yet released sales figures, and its new Jaecoo sister brand are likely to infiltrate this space soon.
ALSO READ: Chery’s ‘tough’ new Jaecoo brand coming to South Africa
What about the bakkies?
South Africa is bakkie country and surely any brand wanting to pack a punch needs to be competitive in that space?
The only significant player here is GWM’s P-Series, and although it’s a vast improvement on previous contenders, it lacks the performance and overall refinement to compete with the best and this shows in the sales numbers too. Q1 saw a volume of 1,320 units, far behind the Hilux (8,849) and Ford Ranger (6,055).
But alas GWM is planning to launch the large-and-in-charge P500 bakkie later this year, complete with a new 2.4 diesel engine, and there are strong rumours of Chery entering the fray too at some point in the not-too-distant future.
It’s certainly a space to watch because it appears the Red Dragon is only getting started.
It will also be fun to watch the premium SUV playground going forward as the Chinese have some interesting brands like Haval’s Wey and Geely’s Zeekr, currently not marketed in SA.
Traditional luxury marques are already digging their own graves with exorbitant pricing - consider that Mercedes sold just 1,600 cars in the first quarter of 2024 and BMW moved no more than 3,081.
Chinese brands will likely lead an early charge in the electric car market too, when it eventually finds traction. GWM currently sells the country’s cheapest EV, the Ora 03, although this has only managed 17 sales so far in 2024. It’s early days though.
An important segment neglected
As it stands so far, the Chinese brands have made a significant impact in the small and medium SUV spaces, and its bakkie presence looks set to grow over time.
But there is one significant zone where these brands have absolutely no representation.
Why don’t we have any affordable hatchbacks from China? Well, probably because it’s not a big segment in that country.
But as much as SUVs are slowly stealing market share in South Africa, compact hatchbacks still accounted for four of the top five passenger car sales positions in 2024.
Consider that Volkswagen sold nearly 24,000 Polo Vivos last year and Suzuki managed to move 16,000 Swifts. Hatchbacks are big business.
But on that note, some of the Japanese and Korean brands do still have one significant ace up their sleeves - factories in India that churn out low-cost cars by the gazillion.
Consider that 42% of all South African passenger cars sold in 2023 were sourced from India, and 75% of entry-level cars.
ALSO READ: 42 percent of the cars South Africans buy are now imported from India
Still, Chinese cars are emerging as a major threat to the establishment because their quality gains have so far exceeded their price inflation.
We do hope that they don’t make the same mistake as the Korean brands, which priced many of their products out of contention as their standing in the market improved. That would be a real shame.
IOL Motoring