The National Automobile Dealers’ Association (NADA) empathises with the South African government and the enormous balancing act it must perform as it weighs up saving lives, protecting the health sector, and getting the economy back on its feet as the COVID-19 crisis develops.
“NADA applauds and agrees with the risk-adjusted and phased approach to unlocking economic activity, and in this regard, urges government to consider the retail automotive sector as a key component in getting all sectors operational,” says Mark Dommisse, National Chairperson of NADA.
“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. It is therefore imperative that dealerships be among the first businesses to commence work when lockdown restrictions are eased,” adds Dommisse.
As soon as the go-ahead is given, new vehicle production facilities in South Africa will resume operations and will require channels in which to distribute the products they assemble. Limiting demand to export only is unnecessarily prejudicial to the factories – domestic consumption driven by the NADA members will surely help reduce the pain to OEMs and their factory workers. Interrupted supply into the local market will cause lost sales, which inevitably will lead to lost jobs.
Jebb McIntosh, founder of Combined Motor Holdings, now Chief Executive Officer and Director at CMH Holdings has this to say: “Automotive retail has a massive investment in stock, with interest costs growing daily, salaries being paid to staff and lease payments to landlords. 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 OEMs and other stakeholders. Strict safety protocols are in place and have been from day one, ensuring the safety of both staff and customers. In addition, dealerships are self-standing properties with a limited number of people visiting daily,” says McIntosh.
At present, there are approximately 1,600 franchise dealers in South Africa, employing 60,000 people directly. Taking the multiplier effect into account, this number increases to nearly one million people in the full automotive industry value chain.
The investment that these franchise dealers (groups and independents) have on the table in dealership facilities and working capital is well in excess of R40 billion – equating to a massive contribution to the fiscus. Retail operations account for 2.5% of the motor industry’s 6.9% contribution to GDP and can make a significant contribution to jump-starting the economy.
Osman Arbee, CEO of Motus notes: “We employ 15,000 people in South Africa. As a result, the safety of our people and customers will always come first. However, by returning to work on 4 May, 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 new hygiene standards and social distancing which will support the low transmission of spreading the Coronavirus due to the nature of the business where there are no large gatherings.
“Our high tax base is a strong contributor to the fiscus and we will help kick-start other industries, including the OEMs, parts manufacturers, 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,” concludes Arbee.