Chinese car manufacturers are pushing to unlock the underdeveloped potential of Africa, with particular attention to electric and hybrid vehicles, since the restrictions on exports to the United States and in Europe send them a global research for new markets.Although over a billion people sat, low incomes and high import tasks have long hindered the efforts of the producers to sell more cars in Africa. The availability of unreliable energy and the lack of charging infrastructure have retained the absorption of EV.
But companies including Byd, Chery Auto and Great Wall Motor (GWM) aim to exploit low prices to advance where others have fought and use an expansion in South Africa as a springboard in a strategy at the continent level.
“We treat South Africa as a very important market for our global expansion,” said Tony Liu, CEO of Chery South Africa, defining the most developed automotive market in Africa a “gateway for the African continent”. Almost half of the 14 Chinese car brands currently active in South Africa were launched only last year. Other, including Dongfeng, Leapmotor, Dayun and Changan, will soon enter the market.
And while the new players move, the most established companies are trying to produce cars locally, allowing them to benefit from a government incentive program that offer discounts for vehicles made at national level.
Liu said that Chery – the Chinese car company number 2 in South Africa – was taking into consideration partnerships or building its own factory to produce cars for the South African market and export to the rest of the continent and potentially in Europe.
OMODA & JAECOO – the independent premium brand of Chery – is also leading feasibility studies for the local assembly, the general manager of South Africa Hans Greyling told Reuters.
Until now, it made no sense for GWM, the largest Chinese car manufacturer in South Africa for sales, to locate the production of components, told Reuters its operational director Conrad Groenewald, since the Chinese imports had been cheaper.
This is changing, however, and outsourcing in a local manufacturer or the creation of a semi-knockdown system, which would transform the partially pre-assembled kits into finished vehicles, were options.
“I think we now have economies of scale … we have to revisit those feasibility studies in the next 12 months,” he said.
Problems with Europe and the United States
Chinese car manufacturers, which are in the middle of a rapid passage to EV and hybrid production, are facing growing obstacles in the United States and Europe.
The growth of new sales of electric vehicles was slower than expected in many rich markets. And the strong EU duties on the imports of Chinese EVs and 100% rates in the United States canceled their primary competitive advantage: the price. Even the efforts to push in large emerging markets such as India and Brazil have shown to be complicated.
While the African market is still relatively small, the sources of the sector indicate enormous growth potential.
South Africa, a long -term market dominated by the likes of Volkswagen and Toyota, built just under 600,000 cars last year. But the government estimates that production could grow up to 1.5 million by 2035 given the right incentives.
The former head of the African car manufacturers association once estimated the potential sub-Saharan Africa market between 3 and 4 million new cars sales per year.
Chinese companies are ready to test this potential.
Chery is launching sales of eight hybrid cars, including five extensive ray plug-in hybrids and three hybrid models, in South Africa. It will also present two small crossover, while a pickup truck should be on sale next year.
It also plans to bring its EV ICAR line and another brand, Lepas, in South Africa in the near future, said Liu.
Byd, the best Chinese manufacturer of electrical and plug-in hybrid vehicles, entered the South African market in 2023.
It has recently doubled its range of South Africa, adding the pickup truck for plug-in hybrid sharks, the Seilion 6 hybrid Plug-in crossover and fully electric SUV SUV models with a range that had previously included only battery models.
Hybrids and a Panafricana thrust
The automotive managers interviewed by Reuters View Hybrids plug-in as fundamental for their African strategy.
“Battery electric vehicles did not really remain in South Africa,” said the Greyo of Omoda and Jaecoo. “We have traveled the path of watching more towards traditional hybrids or plug-in hybrids.”
South African sales of the so -called new energy vehicles – a class that includes traditional hybrids and plug -in together with electric vehicles – are more than doubled from 2023 to last year, representing a 3% share of the total sales of new vehicles.
While the numbers can still be small – 15,611 vehicles, mainly traditional hybrids – Chinese companies are encouraged by the trend.
“On the basis of our experience in China, once the market share of new energy vehicles reaches almost 10%, the demand will begin to explode,” Liu Di Chery said.
Chinese car manufacturers face consumer skepticism on quality, on the availability of spare parts and on the unrelated resale value of their vehicles.
But they are counting on the price and advanced technology that distinguish them from traditional market leaders in Africa and are focusing on the offer of plug-in hybrids and electric vehicles with an initial price of less than 400,000 rand ($ 22,500).
“Until they remain convenient from the point of view of the initial costs, they will be differentiated against the Legacy brands that offer similar specifications,” said Greg Cress of the Accenture consultancy company.
Omoda and Jaecoo, who were launched in Africa in 2023 and manages 52 dealers in South Africa, Namibia, Eswatini and Botswana, hopes to triple sales in the next 18 months and enter New Markets Zambia and Tanzania.
Byd plans to expand its network of dealerships in Eastern, southern and western Africa, including an entry for the first time in Tanzania.
Steve Chang, general manager of South Africa of Byd, said he was not discouraged by the slow adoption of the vehicle market dominated by the internal combustion engine. “I think South Africa and the rest of Africa have a great opportunity for what I call Leapfrog from ice in renewable energy (cars),” he said. “Africa is a very large market.”
