The head of Mitsubishi SA says new Chinese brands could easily exit the country when times get tough, “damaging” the industry and potentially leaving buyers high and dry…
The man at the helm of Mitsubishi Motors South Africa says the barriers to entry in the local automotive market are too low, allowing Chinese brands to come and go “very easily” and ultimately “damaging” the industry.
Thato Magasa, Managing Director of Mitsubishi Motors South Africa, made the comments during an interview conducted in Cars.co.za’s custom-built podcast booth at Naamsa’s recent South African Auto Week 2024 in Cape Town.
Over the past few years, Chinese firms such as GWM and Chery have made significant inroads into the local market, sparking an influx of other brands (most offering high levels of standard specification at comparatively attractive prices) from the world’s second-most populous nation. Recent examples include BYD and GAC Motor, along with Chery subsidiaries such as Jaecoo, Omoda and Jetour, with yet more in the pipeline.
“What we need to start talking about is not necessarily the ‘threat’ of Chinese brands coming into the country, but the low barriers to entry that we have in South Africa, in which brands are able to come in very easily, without making tangible investments into ‘SA Inc’ – and when times are tough, easily exit the country as well,” Magasa told us.
“That is damaging for the industry at large and damaging for the SA consumer in the end. Because, at the end of the day, when these brands leave, what do they leave behind? They don’t support on the aftersales side. And it’s up to either the distributor that’s left in the country to do that or if they’re in South Africa on their own then you get quite concerned as to how that leaves the South African consumers in the end.”
Magasa was perhaps referring to Chinese brands like Geely, which exited the South African market about a decade ago. From what we understand, however, Geely is plotting a local comeback and could thus follow in the footsteps of Chery, which similarly rejoined Mzansi in 2021 after quitting the local scene in 2018. The SAIC-owned MG brand, too, is poised to make yet another return to the local market by the end of 2024.
“I think there are many businesses that are invested in South Africa for the long run, that have been here for decades – and that’s the heritage that we speak to. And what we say is that while we embrace competition and we’d like more competition in South Africa and we’d like consumers to have choice, it must be done with the right intent,” Magasa added.
“There are lots of conversations around the future of our industry here [at SA Auto Week 2024]. But I ask you to look around: how many new entrants are here, actively playing their part? It doesn’t help to just come in and just want to sell to South Africans – you can, because we have low barriers to entry – but how many of us are coming in and trying to actually grow this market?” he asked.
Year to date (at the end of September 2024), Mitsubishi sales in South Africa total 1 577 units, representing a 36.1% drop compared to the same period in 2023. However, the Japanese firm will in November 2024 launch its new Triton bakkie, with the new Outlander Sport set to debut early in 2025.
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