Chinese wheels buckle used market

The introduction of Chinese vehicles into the local market has not been well received by all parties as some buyers are forgoing used light commercials in favour of new Chinese alternatives.

The used vehicle industry is already under significant strain and Darryl Jacobson, MD of Burchmore's said "the last thing it needs is yet another negative factor."

Brand Pretorius, chairman of McCarthy Motor Holdings, which recently introduced the Meiya and Foton ranges of leisure and commercial vehicles to South Africa, said the new Chinese bakkies mostly competed with three- or four-year-old LCVs.

Generally, owner-drivers will still opt for used Japanese LCVs, but the Chinese imports are proving increasingly popular with smaller start-ups.

"These Chinese vehicles are having an impact, especially when it comes to small businesses with limited capital or even companies which are buying LCVs for specific fleet applications," Pretorius notes.

Some differences for used car market

However, he doesn't believe that these events will be repeated in the passenger car segment.

"It will be tough for Chinese manufacturers to undercut the current entry-level small cars by a significant margin, so the impact won't be as severe."

Pretorius explains that certain established manufacturers, like General Motors SA, have the benefit of export credits to offset the prices on their entry level models.

"On the other hand, an independent importer bringing in a small entry level car would pay the full import duty and the realities, should one look at vehicle costings, are quite daunting. The cost of transporting a fully built-up small car from China to South Africa could be as high as R8 000 to R10 000," he noted.

"I know that there is speculation out in the market that a new, cheap, small Chinese car could be launched at a price of some R10 000 less than current competitors, but it's misplaced.

"I think this will be almost impossible to achieve, bearing in mind the freight cost, 30% import duty plus other associated costs.

"So, while the Chinese have certainly intensified competition in the lower end of the LCV market, I don't think this will be replicated in the car market," Pretorius concluded.