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Motor dealership still have a big role to play in automotive retailing

Apr 13, 2022

It was very evident, judging by the presentations and feedback to a poll of delegates, that motor dealerships in South Africa will have a significant role to play in automotive retailing for many years to come. This was one of the outcomes from a very insightful online seminar and panel discussion on the topic “Evolution of the Automotive Retail Sector, the Future Role of Dealerships and the Shift towards Digital Retailing,” held recently.

This was the latest session in the series Let’s Talk Business, an initiative from Messe Frankfurt, organisers of Automechanika, the global trade fair for the automotive aftermarket, in partnership with Absa. This online series is part of the lead up to Automechanika Johannesburg, which will be a face-to-face exhibition at the Expo Centre, Nasrec, from 7-10 June 2022. A further three episodes of Let’s Talk Business online webinar series will take place before the opening of Automechanika.

Mark Dommisse, the Chairperson of the National Automobile Dealer Association (NADA), who was one of the panellists said motor dealers were very much a part of responsible consumerism, whereby they look after the interests of consumers in a complex buying process. He admitted that the digital world played a key role in providing time-saving avenues for potential buyers to research the vehicles they wished to buy, to check out the dealerships offering their choice of vehicle, as well as finance and insurance options.

Then, according to Dommisse, the bulk of buyers still like to go to a dealership to see the vehicle in the metal and to discuss optional equipment and accessories as well as checking out on finance and insurance offerings in person.

“Although there is a lot of noise about the increase in digital retailing in the motor business it is not coming through in data at the dealerships. The human interface is still particularly important to a potential buyer, especially in the realm of the expensive and technologically complex new models and first-time buyers,” explained Dommisse.

The NADA Chairperson said he had tried online shopping for cars in various market segments and the results were most disappointing in terms of the scope of the platforms for digital transactions and left too many questions unanswered.

He added that dealerships were also important as facilities to get a vehicle serviced in line with manufacturer’s requirements.

A poll among those watching this online seminar produced 87% of them agreeing that motor dealerships will continue into the foreseeable future, while 34% of delegates said they were unlikely to purchase a car solely online in the future, with 49% saying they will consider a virtual purchase in the future.

George Mienie, CEO of Auto Trader, said that the fact there are now 38 million people in South Africa with access to the internet underlined the importance of online trading, with 25 million of these people being on social media platforms which provided a variety of avenues to reach these people with advertising or promotional messages.

He said that many companies, including motor dealers, sent the same message to several social media platforms instead of tailoring them to suit the various target audiences. Mienie added that generally consumers were reacting quickly to operating in a digital world, while companies were slower to react. He stressed the difference between brand building and retailing online and said too few companies were using these channels for brand building, instead just concentrating on selling.

Mienie added that Auto Dealer’s research had shown that 80% of people requiring finance to purchase a vehicle did not want to go through this process in front of a person in a dealership, rather preferring to check their credit worthiness online in private.

Henry Botha, Head of Strategy and Business Analytics for Absa’s Secured Lending – Vehicle Finance and Home Loans, gave an interesting presentation on the growing sophistication and persistence of fraudsters in South Africa and ways in which dealers can defend against them. He said the threat of fraud should be top of mind for dealers and private sellers, as digital trading grows, and that financial services institutions have much to offer businesses and consumers in enabling a safer environment.

Turning to the outlook, Thami Letsoala, Absa’s Business Development Manager, Automotive Sector, said it is expected that the domestic vehicle sales and finance market will recover by 2023 and achieve double-digit growth as the economy improves.

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Background information on Messe Frankfurt

The Messe Frankfurt Group is the world’s largest trade fair, congress and event organiser with its own exhibition grounds. The Group employs approximately 2,300* people at its headquarters in Frankfurt am Main and in 30 subsidiaries around the world. In 2021, the company had to contend with the challenges posed by the pandemic for the second consecutive year. Annual sales will be approximately €140* million after having been as high as €736 million in 2019 before the pandemic. Even in difficult times caused by the coronavirus pandemic, we are globally networked with our industry sectors. We have close ties with our industry sectors and serve our customers’ business interests efficiently within the framework of our Fairs & Events, Locations and Services business fields. One of the Group’s key USPs is its closely knit global sales network, which extends throughout the world. Our comprehensive range of services – both onsite and online – ensures that customers worldwide enjoy consistently high quality and flexibility when planning, organising and running their events. We are expanding our digital expertise with new business models. The wide range of services includes renting exhibition grounds, trade fair construction and marketing, personnel and food services. Headquartered in Frankfurt am Main, the company is owned by the City of Frankfurt (60 percent) and the State of Hesse (40 percent).

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* Preliminary figures for 2021



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