Covid-19 taking heavy toll on dealerships, says NADA

13th November 2020 By: Irma Venter - Creamer Media Senior Deputy Editor

The Covid-19 pandemic has seen six amalgamations between dealerships from April 1 to September 30, as well as the sale of 19 others and the closure of a further 38 – all members of the National Automobile Dealers’ Association (NADA) – the association’s national director, Gary McCraw, tells Engineering News & Mining Weekly.

According to statistics from the Motor Industry Bargaining Council (Mibco), 16 183 jobs were lost in the entire South African auto retail after market from March 1 to September 30 – not just dealerships, he adds.

“Unfortunately, we are expecting more, given that many businesses are still finalising consultations as per labour law requirements, so this number is due to increase.”

McCraw says dealerships that intervened early on to protect cash flow and right-size operations are the ones that have been able to weather the storm.

“Successful dealerships realised early that, if new-vehicle sales were low, they needed to market their used vehicle, workshop and parts departments more actively to ensure greater contributions from those departments to the bottom line.

“Many dealers were also able to negotiate revised terms of credit with their financial institutions, landlords, suppliers, and so forth, thereby controlling and protecting cash flow within the business.”

Survial of the Fittest
The South African retail motor industry is coming to grips with the new normal after a demanding and difficult trading period through the heavy stages of lockdown, says NADA chairperson Mark Dommisse.

Most dealerships have right-sized their operations and tightened financial controls over the past six months to counter the downturn in vehicle sales, service appointments and parts sales.

Dommisse says that, if a dealership is not at least breaking even at this stage, heading into the last quarter of the year, then its management must act quickly to do so.

“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.