SA Motor Dealers under increasing pressure

SA Motor Dealers under increasing pressure - [

Motor dealers in South Africa are under increasing business management pressure besides having to operate in tough economic conditions. This was very evident from a presentation by Gary McCraw, Director of the National Automobile Dealers’ Association (NADA), at the recent Gauteng leg of the Business of the Year (BOTY) roadshow, which is a joint venture between NADA and Sewells MSXI, the world’s largest automotive retail solutions provider.

McCraw presented an update on NADA in which he sketched the rapidly changing environment in which businesses operate these days. He also gave feedback from meetings between the Competitions Commission and NADA and then added details about proposed changes under the Financial Intelligence Centre Act. These will be very onerous to dealerships if implemented as proposed. McCraw said NADA would be engaging with the FIC authorities to consider the negative and costly impact that the proposed changes would have on dealers.

McCraw’s opening salvo certainly got the audience’s attention as he listed the unexpected happenings – global and local which had occurred between the mid-year BOTY roadshow in 2016 and this year’s event.

These included:

  • Donald Trump becomes President of the United States.
  • President Zuma fires Finance Minister Pravin Gordhan and subsequently announces a reshuffle of the Cabinet at midnight.
  • Malusi Gigaba is appointed Minister of Finance.
  • Theresa May loses her majority in the British Parliament in a snap election meant to strengthen her position.
  • General Motors disinvests from South Africa.

The NADA executive said these happenings showed how necessary it was for dealer management to be aware of the changing world around them so they could make the necessary changes to the way they did business and planned for the future.

He went on to surprise many delegates by showing how several key economic indicators, such as exchange rates, the oil price, fuel price and CPI had, in fact, improved over the past 12 months, so the local business climate was not as bad and leaders in the industry need to instil a positive attitude in their areas of influence.

McCraw provided interesting background on the meeting with the Competition Commission and explained that this body was proposing the introduction of a code of conduct for the motor industry, which would deal with various issues such as restrictive trade practices, consumer rights of choice and financial barriers to market entry. 

Ongoing engagement with the Competition Commission by NADA on the proposed code will take place over the coming months.

John Templeton, Market Head Operations at Sewells MSXI, provided delegates with details on several useful methods of managing an automotive dealership in these changing times when margins were under pressure and volumes weren’t rising. He said this situation was particularly concerning on average for dealers selling luxury car brands.

He said the tough trading environment meant it was increasingly difficult for dealers to absorb overhead costs solely through after-sales income.

“Tight expense management has to be linked to ensuring all members of the executive team – including heads of the parts and service operations – were made aware of financial processes and given the required business management skills to ensure their areas of responsibility did not become a drain on the overall wellbeing of the dealership.

Motor industry consultant Stuart Norman proved an excellent function director, not only giving several worthwhile insights into the motor business, but also controlling and interpreting the inputs from the various groups who were tasked with discussing and coming up with solutions for several challenges in the retail motor industry.

The BOTY roadshow in Johannesburg followed similar sessions in Cape Town and Durban where dealer personnel could benefit from presentations and discussion on topics which were near and dear to the local automotive retail industry and the many unique challenges it faces in these tumultuous economic times.