Survival of the fittest for South African car dealers

The South African retail motor industry is getting to grips with the “new normal” after a demanding and difficult trading period through the heavy stages of lockdown. Most dealerships have right-sized and tightened financial controls over the past six months to counter the downturn in vehicle sales, service appointments and parts sales.

 

Mark Dommisse, the Chairman of the National Automobile Dealers’ Association (NADA), says that if a dealer is not at least breaking even at this stage, heading into the last quarter of the year, then its management must act quickly with remedial action.

 

The term ‘Retail Darwinism’ is appropriate now more than ever, and if we take a page out of the book on evolutionary theory and apply it to business, it really is survival of the fittest at the moment. Businesses need to adapt and evolve in the changing climate in order to survive.

 

“It’s really tough out there and we can’t bob and weave our way out of trouble at this stage. We must face the challenges head on,” he advises. “I think of it as being in the relegation zone in the English Premier League; you don’t want to be there, but if you are, then you better quickly make a concrete action plan to step-up and get out of the danger zone.”

 

“Even if dealers are making some profit, this is not the time to rest on laurels. There is still worrying economic news on the horizon including a shrinking car parc with relatively few sales to rental companies and a lagging wave of unemployment in the middle class, which makes up an important component of our customer bases. Hopefully, operating in Level 1 of the lockdown, some of the retrenchment flow will be stemmed,” continues Dommisse.

 

He adds that the lessons learned from lockdown are resulting in changes being made in the way dealers do business, but some of the headlines during the lockdown period were somewhat over-zealous, stating that South African dealer models are old-fashioned and not keeping up with the times. It’s important to not let trends in global markets influence expectations in a uniquely South African environment.

 

Digital channels have, and will continue to grow as convenient communication and engagement tools, but should not be considered an alternative to personal interactions at physical dealerships.

 

The bottom line is that in South Africa the final stages of a transaction should be facilitated through a dealership together with a Sales Executive and qualified F&I Manager.

 

“In fact, the personal factor remains important, particularly when arranging trade-ins and selling used cars. Motor dealerships are still best for providing ideal trading environments for customers and I don’t see this well-proven approach changing drastically any time soon.

 

“Our ongoing commitment to maintaining strict safety and hygiene protocols at our dealerships in efforts to keep the disease at bay, goes without question. Our members are fanatical in the way they operate their dealerships to ensure that the OHS protocols are firmly in place, at all times.”

 

NADA’s focus going forward in the medium term will be on several major issues, including the important issue of transformation, which is being led by the recently appointed National vice chairperson of the organisation, Marcia Mayaba, CEO of Barloworld Motor Retail.  The Association will also continue to work extremely hard to enhance and build on the good relationships that have been fostered with key industry stakeholders in various governmental departments over the past seven months.

 

“I have full confidence in our members’ ability to adapt to the changes we are all being forced to make under the ‘new normal’, particularly in terms of making far more use of digital methodology, while still maintaining personal relationships with our customer base,” concludes the NADA Chairman.

 

NADA is a proud member of the RMI.

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