Can South African cars outshine Chinese rivals with government support?

Chinese car brands in South Africa could be facing a double blow, as local and international pressures threaten to chip away at their competitiveness.

At home, the government is considering higher tariffs on imported vehicles, while in China, authorities are clamping down on the deep discounting that has helped many manufacturers gain global ground. Put together, these moves could force Chinese carmakers to raise prices, making their once-affordable vehicles less attractive to South African buyers.

Speaking at a trade conference on Wednesday, 11 August, Minister of Trade, Industry and Competition Parks Tau said the government is reviewing subsidies for locally manufactured vehicles and components to encourage higher local content. Tariffs are also on the table as cheaper imports continue to flood the market, putting pressure on domestic manufacturing.

“Decreasing sales of locally produced vehicles, along with new pressures of tariffs, will continue to pressure the auto industry, which has already suffered from job losses and plant closures.”

Over the past two years, 12 companies have closed and more than 4,000 jobs have been lost.

South Africa’s car market, long dominated by Volkswagen, Toyota and Mercedes-Benz, produced 515,850 vehicles last year—well below the Automotive Masterplan 2035 target of 784,509. Imports now account for 64% of vehicle sales, while localisation sits at 39%, far off the 60% goal.

The industry also faces international pressure, with recently imposed US tariffs cutting into South Africa’s R28.7 billion automotive export market. The sector directly employs 115,000 people, including 80,000 in component manufacturing, many of whom now face uncertain futures.

“While domestic car sales have risen, the value of imports has far outpaced this growth, undermining local production.”

— BMW Group South Africa CEO Peter van Binsbergen

“There is a definite need to relook at our domestic tariffs.”

— Renai Moothilal, CEO of the National Association of Automotive Component and Allied Manufacturers (NAACAM)

Chinese manufacturers are also dealing with challenges on their home turf. Beijing has tightened the reins on price wars, particularly in the electric vehicle market, to prevent smaller firms from collapsing. Retail car sales in China dropped to 1.8 million units in July, down 12% from June, while year-on-year growth slowed to 6.3%.

“Anti-involution is a huge benefit to the industry. Upstream enterprises can instead focus on improving quality, satisfying customer demands and not compete on low pricing.”

— Cui Dongshu, Secretary General of the Passenger Car Association

For South African consumers, the combined effect could be a loss of the affordability that has made Chinese vehicles so popular. If local tariffs rise and Chinese companies are unable to maintain their discount-driven strategy, buyers may see fewer low-cost options in showrooms—and the local auto industry will have even more hurdles to clear.