According to BusinessTech, the rapid arrival of lower-priced Chinese passenger cars is pulling down the resale value of used vehicles in South Africa and is now being counted as a financial risk by WesBank, the vehicle-finance arm of FirstRand. The bank warned that the influx of cheaper new models is eroding the collateral value of older cars, a trend that showed up in FirstRand’s 2026 annual report.
WesBank’s normalised earnings, profit after stripping one-off items, fell 20% to R1.394 billion for the year ended June 2026, down from R1.739 billion the year before. Profit before tax also dropped 20% to R1.909 billion, even though the bank recorded a 13% rise in core lending advances to R212.686 billion and an 18% increase in new retail vehicle-asset finance business. Net interest income, the earnings from interest on loans, rose 5% to R6.347 billion, but credit impairments, losses set aside for borrowers who may default, jumped 26% to R2.604 billion, pushing the credit loss ratio, the proportion of loans that are expected to be unrecoverable, up to 1.30% from 1.15%.
The biggest hit was felt in WesBank’s retail vehicle-asset finance division, where profit before tax fell 35% to R1.016 billion. The bank linked this decline directly to the changing vehicle market, stating that “Chinese car brands are entering the market rapidly, offering advanced technologies, electric and hybrid options, and competitive pricing”. It also noted that it has signed supplier and dealer agreements with several Chinese manufacturers, which have helped grow its loan book but have simultaneously put downward pressure on used-car prices.
For lenders, a vehicle serves as collateral, security that can be sold if a borrower defaults. When the market price of that collateral falls, the loss-given-default (LGD), the shortfall between the loan balance and the resale value, widens. WesBank therefore raised a “judgemental management out-of-model adjustment” to account for the higher LGD risk posed by cheaper new entrants.
What the numbers mean for small business owners
Many small-business owners rely on a vehicle’s resale value to fund upgrades or to free up cash for other investments. A dip in used-car prices means a lower trade-in amount, which can increase the cost of acquiring a newer, more efficient model. The pressure is already visible in WesBank’s Fleet Management and Leasing business, where weaker used-car prices have been cited as a key risk factor.
Data from TransUnion’s Q2 2026 Mobility Insights Report supports the trend. New passenger-vehicle sales rose 15.8% year-on-year in the second quarter, while the ratio of used-to-new registrations climbed from 2.3 in Q1 to 2.7 in Q2. Chinese brands accounted for a 72% year-on-year increase in sales during the same period, giving them a 22.4% share of passenger and light-commercial vehicle sales. Ayesha Hatea, director of research and consulting at TransUnion Africa, said affordability has become a defining theme of South Africa’s mobility market and that consumers are looking for the best overall value proposition rather than simply the lowest price.
For entrepreneurs, the takeaway is clear: the market is shifting toward lower-cost, feature-rich new cars, and that shift is eroding the value of older assets. When planning fleet upgrades or financing a new vehicle, consider the potential resale gap and factor a higher contingency into cash-flow forecasts. Using tools such as the Commercial Funding Suite can help model different depreciation scenarios and assess the impact on loan repayments.
While the influx of Chinese models expands choice and brings advanced technology at a lower price point, it also creates a new risk landscape for lenders and vehicle owners alike. WesBank’s warning signals that the used-car market may continue to feel pressure, and small-business operators should keep a close eye on resale trends when making financing decisions.
