The sales numbers are down for most of the major car manufacturers for 2024 and no more so than Mercedes and BMW. The higher premium end is being hit hard under fire from more affordable Chinese manufacturers.
Only when you see the numbers do you realise how much trouble they are in ad the future is not looking good unless they change and pivot fast. In 2014 BMW sold 24 521 vehicles and in 2024 11 989 which is a drop of more than 50%.
BMW blames the exchange rates for the Rand Dollar since 2010 the Rand has lost another 50% in buying power. That does not tell the full story as the likes of BMW, Audi, Mercedes, Nissan and Toyota have assembly plants in South Africa. The real story is over the last 10 years the Chinese car manufacturers who are not here so a full import have secured more than 30% of the total market share.
What is noticeable is the dealerships that are slowly disappearing with the main BMW dealership being the biggest in Africa covering 3 floors closed 2 years ago. I used to drive past this dealership daily and just presumed they had relocated to new premises.
In the last 8 years BMW has shrunk in size not only in sales, but the dealerships have gone from 55 to 46 which as a business is heading in the wrong direction rapidly. This may seem like a minimal drop, but having 20% less show rooms shows and service departments reveals the demand is tailing off. Globally BMW lost another 4% in sales last year and the more worrying factor is we know these numbers are not coming back. ad are one for good.
In South Africa there is talk of Chinese car manufacturers looking to secure premises for production lines which means they are preparing to up their game. In the last month we had the announcement that Arcelor Mittal the steel manufacturing company is closing down it's steel mills.
This may be a blow to local manufacturing short term but I believe the Chinese will step in and open their own steel mills. The raw materials are here so this will not be seen as a set back, but rather another opportunity. f the Chinese can supply their own manufacturing plants with local steel and the other car manufacturers have to import the the cost price gap will only widen.
BMW if they are going to survive and have a future in the car industry need to pivot before it is too late. BMW need to launch models in the mid to lower range price sector with affordable cars specifically aimed at the middle class income sector in SA who has a salary range between R12K and R30K. Affordable has to be with a monthly cost of no more than R4K compared to the price tag R20K most BMW's have now. Their current monthly costs vary between R10K and R30K so definitely out of reach for the target market. Chinese vehicles are in the R4K-R6K range and why they have taken 30% of the market share.
The economy in SA is not in great shape and the consumer buying power has shrunk since covid days. Many of the high earners have left the country so your target market has changed being the middle class who do not have a lot of buying power and have no expendable income. This will not change due to inflation and a weakening Rand with more job losses expected. When you have more than a 50% unemployment rate the cheaper more affordable cars are what will sell.
This should have been common sense 5 years ago as all businesses under threat need to combat that threat head on or perish.