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Transformation at dealerships ‘woefully slow’, says Legacy Motor Group chairperson

10th March 2023

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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The pace of transformation within vehicle dealerships remains woefully slow, and urgent action is needed if the automotive industry is to achieve true transformation, warns Legacy Motor Group chairperson and shareholder Mpho Dipela.

“A lack of diversity and representation in dealerships has become an increasingly pressing issue within the automotive industry.

“There are still only a few major black dealer principals within this space . . . and there is a particular lack of black and female employees at the middle to senior management level,” says Dipela.

“Given the importance of the sector as an economic driver and job creator, industry stakeholders, and particularly manufacturers, urgently need to increase focus on skills development, job creation and ownership throughout supply chains.”

According to Naamsa | The Automotive Business Council, the automotive industry accounts for some 4.3% of South Africa’s gross domestic product and 17.3% of the country’s total manufacturing output, while it is also the fifth-largest export sector.

In terms of vehicle production and manufacturing, the industry is dominated by seven original-equipment manufacturers (OEMs, or vehicle manufacturers), namely BMW, Nissan, Ford, Volkswagen, Isuzu, Mercedes-Benz and Toyota.

Naamsa figures reveal that the contribution of these automotive companies to skills development and transformation programmes accounted for total expenditure of R2.7-billion from 2015 to 2020.

In 2020 alone, the seven OEMs increased their spending on training and skills development by 8.4% to reach R417.6-million, up from R385.2-million in 2019.

Dipela argues, however, that the OEMs’ social investment efforts have largely focused on manufacturing, rather than taking a holistic approach to supply chains.

“The barriers to entry for smaller black businessmen to secure partnership agreements with OEMs and take ownership of dealerships is extremely high, and OEMs have also tended to favour a few larger players rather than consider smaller players,” he notes.

“Likewise, while the investments made by OEMs in skills and development programmes have yielded numerous benefits for employees entering the industry and working within manufacturing, there has not been a sufficient level of change at the management tier within the dealer network.”

To address this imbalance, OEMs must re-examine their programmes supporting the development and promotion of black individuals at middle to senior management levels at dealership level, says Dipela.

This will not only promote diversity and inclusion in the workplace, but it will also strengthen the industry by bringing in new perspectives and ideas, and stimulating broad-based empowerment.

“Leadership and development programmes that specifically focus on upskilling black individuals and promoting the development of more female and black dealer principals could play a significant role in achieving the goal of greater economic inclusion, as well as small and medium-enterprise development,” he says.

“By investing in these programmes, and supporting small players seeking to own successful dealerships, OEMs can help to create a more inclusive and diverse supply chain, while also contributing to the overall growth and economic impact of the industry.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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