OPINION | Is South Africa’s auto market at a turning point?

By Muhammed Ebrahim

The proliferation of new vehicle brands in the South African market presents both a significant competitive challenge and an important opportunity for established vehicle manufacturers. New models, particularly from Asia, are expanding choice for price-sensitive consumers while driving some of the most significant structural changes to the domestic vehicle market in decades.

These brands are increasingly appealing to younger buyers, combining attractive design with advanced technology, while generally offering more competitive pricing than established manufacturers. This is particularly compelling in a market where households are facing squeezed disposable incomes as a result of rising living costs and elevated consumer debt.

The result is an increasingly crowded South African vehicle market, with more global brands entering, or expected to seek a foothold, in the country. For established manufacturers, this represents both a threat and an opportunity. It is a threat to previously dominant and relatively captive market positions, as the battle for customers is increasingly being fought across pricing, technology, after-sales service, dealer support and parts availability at reasonable prices.

At the same time, it is an opportunity for established manufacturers to demonstrate why their brands have earned the trust and loyalty of South African consumers over decades. They must continue meeting established customer expectations while innovating to defend and grow market share.

Against this backdrop, established manufacturers should be asking: “What do we continue doing?”, followed by: “What should we do differently?”

The answer to the first question is to protect the fundamentals that have built customer trust while continuing to innovate. The South African vehicle market has historically demonstrated that customers are often willing to pay more for a used vehicle from a brand they perceive as reliable than pay less for a new vehicle from a brand that has yet to establish a track record. When it comes to a major purchase such as a car, customers tend to gravitate towards what they know. Familiarity provides a sense of certainty and reduces perceived risk.

But customer behaviour can change quickly. Once a new entrant demonstrates reliability, offers compelling technology and is priced within the reach of South African consumers, market share can shift rapidly.

When customers buy into a vehicle brand, one of the questions top of mind is: “What support will I receive if something goes wrong?” After-sales service can make or break a brand. Increasingly, word of mouth is also influencing purchasing decisions, with customers relying on the experiences of friends, family and other consumers when evaluating brands.

Established manufacturers should therefore not lose sight of a fundamental principle: a successful brand needs to understand what customers will want in the future, sometimes even before customers know it themselves.

That is because a product is no longer simply a product; it is an experience. With a vehicle, that experience begins well before the purchase and continues throughout the ownership journey. At every interaction, a brand is either strengthening its relationship with the customer or giving them a reason to consider what else is available.

From the moment a customer visits a website or sees a social media post, to entering a dealership, signing an offer-to-purchase and returning for their first service, the question should be:  Are we delivering on our core value proposition while introducing unanticipated value?

This means vehicle manufacturers and dealerships should constantly look for ways to remove friction from the customer journey. A seamless, genuinely customer-centric experience is becoming increasingly important. A simple dashboard reminder that a vehicle is due for a service, for example, is no longer enough. Dealerships should be asking how they can make the process easier, more convenient and more valuable for the customer.

The winners in the rapidly evolving vehicle market in South Africa will not necessarily be those releasing the newest or most technologically advanced models. Rather, they will be those companies that successfully combine competitive pricing, trusted brands, customer experience, after-sales service and strong dealer support to attract and retain customers.

What is clear is that it is no longer business as usual in the South African vehicle market, because competition will continue to intensify as more brands enter the market and consumer expectations evolve. Doing things differently is therefore no longer simply an option. It is a survival, growth and business resilience imperative.

By Muhammed Ebrahim is partner in the Audit division at BDO South Africa