Car dealerships Mercedes BenzDespite tough economic times, South Africa’s motor dealerships remain tenacious and resourceful.

This is according to John Templeton, the Marketing Head Operations at Sewells-MSXI South Africa, a leading global consulting and outsourcing company which specialises in the automotive industry.

“Although gross profit (GP) as a percentage of sales is falling on a year-to-date basis in 2017 (to the end of August) in terms of passenger cars, luxury vehicles and trucks, the key indicator of dealer health, return on operational assets (ROA), remains amazingly steady, which is a tribute to good management,” Templeton explains.

Retained income and aftermarket absorption

Passenger cars and heavy commercial vehicles are doing much better than luxury vehicles in terms of retained income, while in terms of activity, passenger cars are steady, trucks are up significantly, and luxury vehicle activity has slumped since the beginning of the year.

Aftermarket absorption, which is the outcome of resourceful management of the service and parts departments, is proving the saviour, with trucks doing particularly well while both passenger cars and luxury vehicles are above the linear average.

Productivity and used vehicle sales

Productivity, which is derived from dividing the dealership’s total gross profit by the total number of employees, has fallen significantly for trucks in the first eight months of the year while it remains steady for cars and luxury vehicles.

The strong demand for used vehicles is mirrored in the upward trends for trucks and passenger cars, while it remains steady for luxury vehicles. New car sales per salesperson are on an upward curve, but the trend is downward for trucks and luxury vehicles.

“We continue to find that motor dealers in South Africa are able to manage their businesses efficiently and profitably in changing economic environments, which is a tribute to the high calibre of management and the quality of training in the major groups and companies,” concludes Templeton.