In South Africa's competitive automotive landscape, Combined Motor Holdings (CMH) is making significant strides through a focused strategy involving affordable and popular brands. This investment holding company has successfully established a dealership network that includes key players such as Haval, Chery, and Suzuki, which have all seen impressive growth in recent years. CMH's market capitalization has nearly doubled in just five years, showcasing its rising influence in the sector.
A Strategy Built on Popularity
CMH's approach revolves around promoting budget-friendly vehicles from Asian manufacturers. Suzuki has emerged as the third best-selling car brand in the country, recently surpassing Volkswagen in sales—an achievement that seemed improbable only a few years ago. Haval and Chery are also rapidly gaining ground, selling more units than established brands like BMW and Mercedes-Benz. For instance, Haval's sales reached 14,265 units in 2023, approximately double the figure from three years prior.
Financial Success Amid Shifting Preferences
The surge in demand for these affordable vehicles has led to substantial financial gains for CMH, which has doubled its profit margins to R408 million over the last five years. CEO Jebb McIntosh highlighted the trend of consumers gravitating towards more accessible vehicles, noting that over half of all cars sold in South Africa are imported from India or China. CMH’s parts distribution arm, Mandarin Parts Distributors, has also become a leading importer of Chinese automotive parts, resulting in a 20% profit increase for its components sector.
Competitive Landscape: Motus Holdings
CMH's main rival, Motus Holdings, operates in the premium vehicle segment, managing brands like Audi, BMW, and Mercedes-Benz, alongside Kia, Hyundai, and Renault. However, Motus faces challenges as rising costs and economic pressures lead consumers to seek lower-priced alternatives or postpone vehicle purchases, impacting its profitability.
The Rise of Chinese Brands
The increasing acceptance of Chinese vehicles in South Africa aligns with a broader global trend, where affordable options are steadily capturing market share. Standard Bank has reported a year-on-year growth in financing plans for Chinese cars, despite these brands representing less than 10% of total retail sales. Derick De Vries, Head of Automotive Retail at Standard Bank, stated, “These brands are making significant gains, reflecting a shift in consumer preferences.”
While overall vehicle sales in South Africa have declined in 2024, brands like Suzuki, Chery, and Haval continue to thrive, gradually expanding their presence in the market and solidifying CMH's position as a formidable player in the industry.
