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New generation of SA car buyers: 3 major auto industry disruptors affecting the way dealers sell cars in Mzansi

2018-07-26 22:33

Image: iStock

The Annual National Automobile Dealers’ Association Dealer Satisfaction Index (DSI) marked its 23rd year running at its awards evening earlier in July.

The DSI forms a vital link between dealers and manufacturers and this year's event highlighted a consensus among speakers on "industry disruptors".

Platform for robust feedback

Mark Dommisse, National Chairperson of NADA, said: "The DSI survey forms a vital link in the relationship between dealers and manufacturers. This year’s survey showed a high completion percentage rate of over 80% in the passenger vehicle section. We also had one of the highest completion ratios in DSI history this year, which is extremely encouraging."

"The DSI survey provides the dealer body with a platform to provide robust feedback to manufacturers and importers. In most cases, the findings are used to benefit the working relationship for both parties."

Areas of concern

Over the years, the results of the survey have been used by dealer councils and manufacturers as an effective management tool to address areas of concern and thereby improve service delivery throughout the entire value chain to the ultimate benefit of the consumer.

Dommisse addressed the very real economic factors facing the industry.

Digital disruptors

"Political uncertainty has had a major effect on investment appetites, as well as consumer spending on large ticket items,” said Dommisse.

"While consumer confidence is relatively high, the rest of the underlying metrics like household debt, inflation, fuel, and increased consumer taxes are putting our businesses under pressure. Apart from a very slow economy that hasn’t quite manifested in the Ramaphoria everyone had hoped for, the retail motor industry is facing frightening pressures.

"We need to embrace the ever-growing presence of digital disruptors in our game. They are competitors to the traditional dealer model, used car supply and our F&I departments and we are being challenged. We need to evolve and continue to align with this new generation of customer,” continued Dommisse. 

The speakers shared a number of thought-provoking insights into the retail automotive industry. Additionally, all three speakers shared similar thoughts on the "disruptors" the industry faces.

1. Online marketing and dealing

Paul de Vantier, Managing Director, Lightstone Consumer, noted that when it comes to online marketing and dealing, this industry has seen a growing number of people who will transact the whole deal online, from start to finish, with the dealer simply being a delivery and service point.  This isn’t something that’s coming, he said, it’s something that’s already happening.  And he is convinced that this trend will grow. 

De Vantier also made note of South Africa’s aging car parc. In 2015 it was 9.6 years, but now it has aged to 9.9 years. He attributes this to rising vehicle prices, affordability and general consumer confidence. “Consumers either can’t afford to replace their vehicles or lack the confidence to commit to long-term financing deals,” stated De Vantier.



2. Emerging trends

Ghana Msibi, the Executive Head of Sales and Marketing at WesBank, shared his views on the significant changes that are happening in the motor industry. The main emerging trends that Msibi highlighted are electric vehicles, connected cars, mobility as a service and autonomous vehicles.

3. A new generation of customers

"We cannot ignore the largest disruptor out there – the new generation of customers," said Msibi. "As an industry, we can’t continue to offer them solutions on the same basis as we’ve done before. 

"Our traditional approach has given us a superior footing in the industry, but if we don’t meet them halfway, they will ultimately find alternatives that suit them."

Msibi further commented that the existing strength of industry players provides a powerful platform to offer services to the new generation of customers.

NADA (constituent association of the Retail Motor Industry Organisation), which represents franchised passenger and commercial vehicle dealers in South Africa, engages the services of Lightstone Consumer to conduct the survey annually.

Views of franchised dealers about their on-going relationship with their respective manufacturers or importer are expressed in the survey. The results show the general health of the dealer/manufacturer relationship, indicate potential difficulties and highlights where there are strong and constructive working relationships. 

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