It is imperative that car and truck dealerships be among the first businesses to return to work once lockdown restrictions are eased, says National Automobile Dealers’ Association (NADA) chairperson Mark Dommisse.

“In order for the economy to function efficiently, it relies on various forms of crucial mobility services, including the repair and maintenance of private and public transport, parts availability and new vehicle supply. 

“The motor industry plays a critical role in getting people, products and services to market.”

As soon as the go-ahead is given, new-vehicle production facilities in South Africa will resume operations and will require channels through which to distribute the products they assemble, adds Dommisse.

Limiting demand to export markets only is “unnecessarily prejudicial” to the factories – domestic consumption driven by the NADA members will help reduce the pain to vehicle manufacturers and their factory workers, he notes.

Interrupted supply into the local market will also cause lost sales, which will inevitably lead to lost jobs, he cautions.

BACKED BY BUSINESS
NADA’s assertions are backed by some big players in the vehicle retail sector.

“Automotive retail has a massive investment in stock, with interest costs growing daily, salaries being paid to staff and lease payments to landlords,” says Combined Motor Holdings CEO Jebb McIntosh.

“Under the lockdown, these costs remain and are draining cash resources of every dealership.  Every day this continues, means an increase in the number of dealerships that will never open their doors again, and a greater number of retrenchments at dealerships that do open. This will only add to the growing number of jobless people begging the government for support.

“Franchised dealerships are disciplined businesses, that are used to complying with protocols which are overseen by [vehicle manufacturers] and other stakeholders. Strict safety protocols are in place and have been from day one, ensuring the safety of staff and customers. In addition, dealerships are self-standing properties with a limited number of people visiting daily.”

At present, there are about 1 600 franchise dealers in South Africa, employing 60 000 people directly.

According to NADA, the investment from these franchise dealers (groups and independents) in dealership facilities and working capital is more than R40-billion.

Retail operations account for 2.5% of the motor industry’s 6.9% contribution to gross domestic product.

“We employ 15 000 people in South Africa,” adds Motus CEO Osman Arbee.

“As a result, the safety of our people and customers will always come first. However, by returning to work on May 4, we will be best placed to save our businesses, jobs and help government reduce the need for further support packages. 

“The motor business can effectively apply the [required] hygiene and social distancing standards, which will support the low transmission of spreading the coronavirus. 

“Our high tax base is a strong contributor to the fiscus and we will help kick-start other industries, including [vehicle manufacturing], parts manufacturing, vehicle asset financing, other financial services and the workshops. 

“We also have a vital role to play in supporting the mobility needs of any other business or industry that is allowed to recommence trading. Simply put – we represent a low-risk and high-return opportunity,” states Arbee.

“Franchise dealerships are well geared to institute and manage a wide range of safety measures and infection prevention protocol,” echoes Supergroup Automotive CEO Graeme Watson.

“This will not only support the phased startup of the economy, but will also provide a vital support to motorists who will rely on private vehicle usage, as opposed to public or shared transport solutions.

“In addition to this, our staff rely on a considerable element of incentive-based earnings and a further extended lock-down period will have a dramatic effect on their livelihoods and will, no doubt, result in significant redundancies. 

“This, together with our large fixed overheads and cash consumption during a prolonged lock-down period, will materially affect the future viability of many of our dealerships and the retail motor industry as a whole,” states Watson.

CASH RESERVES DEPLETED
“We have 6 000 staff members at Unitrans, with the majority earning a significant portion of their salaries on commission-based structures,” says Unitrans Automotive Group CEO Brynn Stephenson.

Earning a basic salary, if paid without any commission, is in no way a sufficient income. With no turnover in our dealerships, cash reserves will soon be depleted, resulting in the frightening prospect of a complete business restructure.”

CAN BE DIGITISED
“It is crucial that the dealer retail market swings into gear as soon as possible,” says WesBank Motor CEO Ghana Msibi. 

“Dealers are a critical enabler in the automotive value chain, and with current technologies the financial industry can be largely digitised. 

“We can execute almost all aspects of finance and insurance processes online, and can nearly completely eliminate the need for consumers to enter dealerships prior to the final delivery of vehicles.

“WesBank predicts that social distancing will be part of our lives for quite some time to come and [we] expect more people will be leaning towards safer means of transportation in efforts to avoid being exposed to contagious illnesses,” notes Msibi.

'HIGHLY VULNERABLE'
“We remain committed to contributing and supporting the resurgence of the South African economy within the important safety constraints required to combat the Covid-19 pandemic,” says Dommisse.

“We are a highly vulnerable industry. Motor retail is right on the edge but, if it is saved, and can open quickly, we can bring in revenue both for dealership staff and to the fiscus, which is a win-win for all.”

NADA represents the interests of businesspeople who own, operate and manage new passenger and commercial vehicle franchises, motor- and motorcycle dealerships and qualifying used-vehicle-only outlets in South Africa. 

NADA has 1 326 members, which make up 85% of all new franchise dealerships in South Africa.