Confidence under pressure

Consumer confidence is under severe pressure from rapidly escalating prices, political uncertainty and an economy that has not kicked into the higher gear anticipated when Cyril Ramaphosa became President.

Left_Mark Dommisse_Chairperson_NADA_Right Ghana Msibi_Executive Head_SalesandMarketing_WesBank

Mark Domisse (left) and Ghana Msibi

This was the underlying sentiment that emerged from the comments at the recent (23rd) annual National Automobile Dealer’s Association (NADA) awards function for Dealer Satisfaction Index (DSI) results.

“The DSI survey forms a vital link in the relationship between dealers and manufacturers. This year’s survey showed a high completion percentage rate of more than 80% in the passenger vehicle section,” says Mark Dommisse, National Chairperson of NADA. “We also had one of the highest completion ratios in DSI history this year, which is extremely encouraging.

“The DSI survey provides the dealer body with a platform to provide robust feedback to manufacturers and importers. In most cases, the findings are used to benefit the working relationship for both parties.”

Over the years, the results of the survey have been used by dealer councils and manufacturers as an effective management tool to address areas of concern and thereby improve service delivery throughout the entire value chain to the ultimate benefit of the consumer.

“Political uncertainty has had a major effect on investment appetites, as well as consumer spending on large ticket items,” he says.

“While consumer confidence is relatively high, the rest of the underlying metrics such as household debt, inflation, fuel, and increased consumer taxes are putting our businesses under pressure. Apart from a very slow economy that has not quite manifested in the Ramaphoria everyone had hoped for, the retail motor industry is facing frightening pressures.

“We need to embrace the ever-growing presence of digital disruptors in our game. They are competitors to the traditional dealer model, used car supply and our F&I departments and we are being challenged. We need to evolve and continue to align with this new generation of customer.”

Paul de Vantier, Managing Director, Lightstone Consumer, noted when it comes to online marketing and dealing, this industry has seen a growing number of people who will transact the whole deal online, from start to finish, with the dealer simply being a delivery and service point.

disruptors

“This is not something that’s coming, he says, “it is something that is already happening – and this trend will grow.”

De Vantier also made note of South Africa’s ageing car parc. In 2015 it was 9,6 years, but now it has aged to 9,9 years. He attributes this to rising vehicle prices, affordability and general consumer confidence.

“Consumers either cannot afford to replace their vehicles or lack the confidence to commit to long term financing deals,” he says.

Ghana Msibi, the Executive Head of Sales and Marketing at WesBank, says: “We cannot ignore the largest disruptor out there – the new generation of customers. As an industry, we cannot continue to offer them solutions on the same basis as we have done before.

“Our traditional approach has given us a superior footing in the industry, but if we do not meet them halfway, they will ultimately find alternatives that suit them.”

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