Car Dealership enquiries rise more than 150% as consumers anticipate their opening.
Various industry bodies, including car dealership bodies, made representations for inclusion in “specific directions”. The submissions support a phased approach to the opening of car dealerships in South Africa.
It is in the best interest of the South African consumer as well as the car dealership that:
- ALL vehicle dealerships, both independent and franchise, should be allowed to trade under level 4,
- and that the “specific directions” be communicated as a matter of urgency so that dealerships be allowed to open their doors.
VEHICLE SALES UNDER SPECIFIC DIRECTIONS
Both independent car dealerships and franchise car dealerships should be specifically included:
- The independent car dealership dwarfs the franchise car dealership in number in South Africa, which would be an important consideration in including independent as well as franchised car dealerships in a phased approach under governments “specific directions”.
- Used car sales dwarf new car sales in South Africa by a factor of more than 2:1.
- Independent car dealerships mostly fall into the small to medium enterprise category, arguably the sector most at risk.
Vehicle buying consumers are searching for cheaper second hand cars from car dealerships:
- As consumers lose their jobs and/or receive salary cuts, they are demonstrating an urgent need to free up cash or alternatively reduce monthly household costs, arguably in order to feed their families.
- This is evident as AutoTrader sees search for second hand vehicles under R50k increase by almost 300% from normal pre lockdown levels.
- Evidence from dealer customers show consumers trading down in all categories, including higher income level consumers.
Real Examples:
- BMW X5 50D (R730k) down to BMW 520d (R500k)
- ML63 (670k) down to a C180 Merc (R300k)
- Ford Ranger (R335k) down to a Nissan NP200 (R160k)
Vehicle buying consumers expected car dealerships to be open and trading on Monday, 4 May 2020 as enquiries to car dealerships increased by more than 150% to above pre-lockdown levels.
73% of vehicle buying consumers surveyed on AutoTrader’s website, during the first week of May 2020, indicated that lockdown has negatively impacted their financial well being. 27% of consumers surveyed are under pressure to replace their vehicle within the next 4 weeks.
- The sooner consumers are allowed to trade with vehicle dealerships, the sooner their family’s financial pressures may be eased.
- 74% (a large majority) of consumers are already in the consumer car buying cycle and plan to buy or sell a vehicle within the next 2-3 months, this pipeline needs to be managed to avoid a further financial impact on both consumers and car dealers.
For the proper functioning of the supply chain for vehicle sales, licence departments, testing stations, roadworthy centres, etc need to be allowed to open under level 4 lockdown along with vehicle dealerships in order to facilitate transfer of ownership from the car dealership to the buyer.
As an online marketplace, AutoTrader represents 85% of the second hand vehicle market and has sight of consumer demand data, dealer supply data, as well as pricing data, at scale via 35million car searches per month. AutoTrader is therefore a sound proxy for the automotive economic model as it relates to Demand, Supply and Pricing.
A phased approach is necessary to help contain the virus and resume economic activity, in order to help consumers change their lifestyles by selling their vehicles. If protocols at dealerships are implemented in a controlled fashion, the risk of infection at car dealerships is low compared to shopping centres and restaurants.
