New-car dealerships are presently in ”survival mode”, CEO of the Retail Motor Industry Association (RMI) Jeff Osborne said on Friday.
”Already some have closed and there has been some significant consolidation within new-car dealerships.
”We hope this will level out at some stage but that will depend on what interest rates do and on the fuel price.”
He said that dealerships were now retrenching staff, but ”only as a last resort”.
He said, however, it was not all ”doom and gloom” for the industry, pointing to some recovery in the used-car market — the first upturn in four years.
”A lot of people are buying into used cars as opposed to new cars. South Africans are very conscious of price.”
Osborne estimated that the used-car industry had grown about 12% this year.
”You must remember that some new-car dealerships sell used cars as well,” he said.
Historically, the motor industry was a cyclical one and had in the past proved to be resilient.
”When we come out of a low we always hit a new high,” he said.
Another positive note was that workshops at new-car dealerships would do well as people drove their cars for longer.
”Those cars will need repairs and replacement parts.”
While passenger-car sales were faring badly, the sale of heavy vehicles was still good as the government had set aside R480-billion for infrastructure upgrades, Osborne noted.
The market for light commercial vehicles was not doing well — and was probably an indication of how small businesses were performing, Osborne said.
Exotic cars, however, were selling well.
”People are still buying Porsches and Ferraris,” he said.
Osborne said that vehicle repossessions were currently high.
”We work closely with the banks — and they say that repossession is a last resort — they would rather consumers be proactive, contact them and look at restructuring payments.” – Sapa