An Mpumalanga black empowerment group says French car maker Peugeot took them for a ride by using their black faces and names to start a dealership that was always going to fail.
Former Mpumalanga finance minister Jacques Modipane says Peugeot Motors South Africa (PMSA) approached his consortium looking for black business people to open a new dealership in Nelspruit.
When the four-person consortium expressed doubts about being able to start such a business because the group could only raise R1,5-million between them, Peugeot agreed to allow them to continue, choosing to leverage their black economic empowerment (BEE) credentials instead.
They had expected to get cars on consignment instead of cash.
”They said that we could use the R1, 5-million in creating the corporate identity [the standard furnishing found in all official dealerships]. Some of the material we had to import from Spain. It was very expensive.
”PMSA has abused the BEE concept and made us invest hard-earned resources in an environment devoid of institutional support,” says Modipane.
He says the failure of the business franchise and its relationship with the multinational franchisee lend themselves to a business case study about whether there is sufficient government intervention in the retail industry to ensure that empowerment players are not hoodwinked into getting into unsustainable ventures.
The dealership is now closed and the two parties are at war over who owns the corporate identity wares, such as the signage and furniture. PMSA has removed them and stored them in a warehouse. Malebo says the company is not entitled to this and has laid charges of theft against PMSA.
Modipane and his team blame the company for causing their business to come to a premature halt by expecting them to meet standards set for long-term players in the industry instead of providing backup for an inexperienced and cash-strapped entity.
Modipane’s company entered the car retail business after Peugeot returned to South Africa in 2002 and started trading as Peugeot Motors South Africa. At the time, Peugeot products were already being sold in Mpumalanga, but not through a dedicated dealership.
Modipane says problems began when PMSA went against the gentleman’s agreement that his group would be granted an exemption from normal dealership agreements because they were an empowerment entity. This, Modipane said, would be reflected when the dealership agreement was recorded on paper. It was never drawn up by Peugeot, says Modipane.
Their woes were further compounded by PMSA’s 21-day turn-around time between placing orders for new cars (which are assembled in France) and the arrival of the cars on the showroom floor, causing buyers to look elsewhere. Modipane says it took even longer for spare parts to arrive, sometimes up to nine months.
PMSA demanded a deposit before supplying spare parts.
Peugeot denies that its behaviour was the reason the wheels came off Modipane’s business.
PMSA managing director Thierry Poirat denies a special agreement was entered into with Modipane’s company. He says PMSA has stuck to the the dealership agreement.
He says all dealers would love to have cars and parts arrive earlier than they do.
Poirat says Automobile Peugeot stood to gain nothing from the failure of the dealership. On the contrary, it was a blow to the brand.
”We did everything we could to help them. It is sad that business did not work out, but that sometimes happens.”