I am saddened at the losses my motor-industry clients have incurred recently. Mostly, they are not to blame.
Many dealerships (at least 65 to date) have closed in South Africa due to the economic crisis, some due to their product losing appeal or tight margins demanded by head office.
What defies logic is what I’ll call Manufacturer Logic. When I was in the military, it was called Permanent Force (PF) logic. Manufacturer Logic considers South Africa a Third-world economy with First-world infrastructure, therefore we have seen manufacturers:
Off-load vehicles which have been unsuccessful elsewhere
Bring in imported brands, and remove them once they become popular
Load new vehicle prices by at least 40%, because the public keep buying
Offer great discounts to Large Corporations, which dealers cannot beat
When cars in England are “buy one, get one free,” do a price INCREASE in South Africa, to nail the consumer more
Am I the only one that sees a pattern as to why manufacturers are struggling?
According to CAR magazine’s January 2009 edition, “decades of bad management have resulted in the current predicament. It all proves once more that many companies are managed with a lot less sense than we realise.”
Amen. But let it not remain so.