This move is the latest and most symbolic sign of the growing influence of Chinese automakers in South Africa, the largest economy in Africa, and yet another recent example of the rapid rise of Chinese brands' global influence.
Last December, just four years after re-entering the South African market, Chery's sales surpassed those of Suzuki, making it the second largest passenger vehicle brand in South Africa. Tony Liu, CEO of Chery South Africa, stated in an interview last October that the South African market is of significant strategic importance and can serve as a gateway to the broader regional market through the African Continental Free Trade Area (AfCFTA) agreement. In other words, South Africa provides Chery with a strategic entry point into the African market.
He pointed out that Africa's population size is comparable to India's, and "it still has great growth potential in the coming decades." "The demographic structure here is young, and we believe the market prospects are very broad." Although the South African market is small, it is still growing and is currently one of the countries with the lowest car ownership in the world.
Following the announcement of Chery's acquisition of the Nissan South Africa plant, Tony Liu declined to comment in a phone interview.
Image source: Nissan Motor Corporation
From Nissan's perspective, the sale of the plant is part of the company's large-scale "Re:Nissan" restructuring plan. The Japanese automaker is trying to emerge from its worst financial crisis in decades, and in addition to closing factories, it will also lay off 20,000 employees, cut production capacity, and even sell its headquarters building.
Irvin Jim, general secretary of the National Union of Metalworkers of South Africa (NUMSA), stated that factory ownership changes should guarantee existing jobs.
"Nissan has always faced difficulties," he said on the phone, "so if a company takes over and invests, we should be positive."
Chery's acquisition highlights the globalization strategies of Chinese automakers who are accelerating their "going out" efforts amidst slowing domestic demand and fierce competition. Despite facing tariff barriers, Chinese automakers have gained a larger share of the European electric vehicle market with their software-centric and more competitively priced models, proving difficult for traditional automakers to match.
