South Africa’s automotive landscape has undergone profound shifts in recent years, with the emergence of new trends and challenges reshaping the industry. At our latest Experience-First event in Johannesburg, Jacqui Barker, Keyloop’s OEM Strategy Director, sat down with an esteemed panel of OEM and dealer partners to reflect on these changes and contemplate the road ahead.
Several key themes emerged during the discussion as the panel offered valuable insights about their experience of the evolving nature of the South African automotive market.
The panel featured Gary Scott (Chief Executive Officer, KIA South Africa), Veliswa Rozani (Chief Financial Officer & Chief Information Officer, NMI), Mark Raine (Chief Executive Officer, MBSA), Gideon Bothma (Chief Financial Officer, CFAO), and Stephen Lay (Automotive Director, MHD).
Here are the main takeaways from this fascinating discussion.
Theme 1: The rise of Chinese vehicles and the “buy down” trend
Various factors drive the phenomenal growth in the popularity of Chinese vehicles in South Africa. Affordability has emerged as a primary driver, with economic uncertainty and high unemployment rates prompting consumers to seek more budget-friendly options. Plus, the influx of new entrants offering technologically advanced vehicles at competitive prices has disrupted the existing market dynamics.
Over the past few years, we’ve witnessed a notable shift in consumer behaviour towards “buying down,” characterised by a preference for lower-cost brands that offer compelling features and functionalities. This trend has been further fuelled by the normalisation of pricing and the availability of innovative tech in entry-level vehicles.
Theme 2: Adapting to the electric vehicle revolution
Although the adoption of electric vehicles (EVs) in South Africa has been slow, the landscape is primed for transformation. Given the inconsistency of electric supply with load balancing, which is driving the rapid adoption of solar, South Africa has the potential to become an EV hot spot.
The inevitability of an EV market means the role of Chinese brands becomes increasingly significant. These brands have the opportunity to drive change and innovation in the EV space, leveraging their agility and technological prowess to meet evolving consumer demands.
However, the journey towards electrification is not without its challenges. Infrastructure, cost of ownership, and regulatory frameworks are key areas that require attention to foster widespread EV adoption. As South Africa navigates this transition, stakeholders must collaborate to create an environment conducive to sustainable mobility solutions.
Theme 3: Marketing and selling brands from traditional to new entrants
Marketing and selling Chinese and EV brands in South Africa presents the industry with unique challenges and opportunities. Affordability remains a central theme, with consumers seeking value propositions that align with their financial realities.
Moreover, the aftersales experience plays a crucial role in customer satisfaction and retention, with economic uncertainty delaying renewals. By enhancing aftersales services and leveraging innovative technologies, manufacturers and dealerships can elevate the overall ownership experience and build brand loyalty.
This is a significant opportunity for the market. There are 12 million cars in South Africa, and the stock is ageing. This means retention is critical: OEMs want to keep the repair in their network and extend service packages to ensure loyalty and drive retention.
Tactical activities to support initiatives around extended warranty include making service more accessible and using weaknesses as strengths. For example, it’s well known that wheels, tyres, and windshields are prone to damage, so retailers are more likely to get customers visiting more frequently for these kinds of issues.
With that in mind, it’s essential to play on affordability and agility with service while you wait. Plus, it’s important to create the best environment for customers while they wait—small details such as good-quality coffee make customers feel safe and welcome and help give them the brand experience they expect.
Theme 4: Enhancing customer experience
The customer experience is now paramount for driving loyalty and long-term success in the automotive industry. The growth of digital and other verticals in sectors such as retail, travel and financial services has transformed customer expectations.
Harnessing the power of data and technology enables organisations to tailor their offerings to meet consumer’s evolving needs and preferences. By prioritising elements such as personalised communication, streamlined processes, and proactive feedback mechanisms, OEMs and retailers can create meaningful connections with their customers, ultimately fostering loyalty and growth.
Theme 5: Embracing innovation and sustainability
Innovation and sustainability are at the forefront of the automotive evolution. From embracing electric mobility to implementing renewable energy solutions, industry players are tasked with driving positive change. By investing in infrastructure, promoting local production, and adopting omnichannel approaches, South Africa can position itself as a leader in the global shift towards sustainable mobility.
As we navigate the complexities of the automotive landscape, it’s essential to remain agile, proactive, and consumer-centric. By embracing change, fostering collaboration, and leveraging innovation, South Africa’s automotive industry can embark on a journey of growth, resilience, and sustainability in the years to come.
We’d like to thank our panel for taking the time to participate in the discussion and for sharing their insights so generously. It made for a fascinating and thought-provoking conversation.
