I hope this newsletter finds you in good health and spirits despite the challenges we are currently facing as a country. It is no secret that we are going through a difficult time, but I believe that in the face of adversity, we can come together and overcome any obstacle.
As members of this association, we have a unique opportunity to support one another and make a positive impact in our communities. Together, we can find innovative solutions to the problems we are facing and work towards a brighter future for our country and our businesses.
Remember that in times of hardship, it is our resilience and determination that truly shine through. Let us continue to work together with hope, optimism, and a shared commitment to making our country a better place.
I have no doubt that with our collective strength, compassion, and dedication, we can overcome any challenge and emerge even stronger than before. Let us move forward with a positive mindset and a firm belief that together, we can achieve greatness.
2023 NADA Dealer Conference, a resounding success
This year’s National Automobile Dealers’ Association’s (NADA) Annual conference was jam packed with presentations and discussions on topics spreading across technology, industry trends, future-proofing a dealership and retaining customers in challenging times.
MSX | NADA Business of the Year Awards honours exceptional performance of at automotive dealerships across the country
The 2022 MSX | NADA Business of the Year (BOTY) Awards took place in Johannesburg in March at a black tie function, which followed the high-impact NADA Dealer Conference.
Affordability drives Light Vehicle brand sales
Affordability appears to be a primary factor in driving new Light Vehicle sales. In this edition, Lightstone takes a look at who the top 10 brands were in both Light Vehicle and Commercial vehicle sales in 2022 and how they have performed over the past 5 years.
South Africa – Automotive Retail Financial Performance Trends – June 2021 to January 2023
Product supply constraints for South African automotive retailers, are steadily reducing, with clear evidence that rising new inventory levels now pose a challenge to dealers. Consumer demand for new vehicles is steady, be it that affordability is a primary consideration by consumers.
Five Ways the Auto Industry Can Weather the Recessionary Storm
By Kriben Reddy, TransUnion Africa, auto information solutions vice president
We’ve been through a tough few years in the auto industry. Covid-19 brought the entire industry to a standstill, and just when we started recovering, we were hit with supply chain problems, rising interest rates and inflation, and loadshedding. Now, as we head into 2023, we’re staring down the barrel of a recession. It never rains, I tell you.
A recession will likely see a potential drop in car sales as people hold onto their cars longer and delay buying decisions. Consumers are already taking serious strain: TransUnion’s latest quarterly Consumer Pulse Surveyshows two in three South African households (67%) are cutting their discretionary spending – and even then, at least one in three expect to be unable to pay their bills and loans in full.
And if we sell fewer cars, every part of the industry feels the impact: finance, tracking, insurance, maintenance, repairs.
So, what can we as an industry do about it? Cutting prices and offering easy financing options is always an option. But ultimately, that’s a short-term fix that affects profits and shareholders, and is not sustainable. For me, there are five actions we can take to ease the effects of a downturn.
Broaden the credit net
Around 24 million sales leads are generated each year, but the industry only sells around 580,000 vehicles. TransUnion’s data suggests that less than 15% of vehicle finance applications get taken up. What this means is that people want to buy cars, but are finding reasons not to make the purchase.
A big challenge for the industry is to work with information and data providers to use alternative data to allow more people to qualify for credit. According to TransUnion’s Consumer Pulse Survey, more than half (54%) of consumers believe their credit scores would change if alternative data were included in their credit report. We’ve got to be open to change.
Make the most of technology
We live in a digital world, where we can reach massive potential new audiences directly in the palm of their hands. We’ve got the opportunity to start building our customer base of the future by driving brand excitement and loyalty, and understanding their needs and wants.
If you’re still going to be putting out straight-forward price lists with bog-standard images of a car in 2023, you may be in for a struggle. There’s never been a better time to digitise and refresh the customer experience.
Get innovative with mobility models
At TransUnion, we’re constantly talking about the concept of ‘mobility as a service’. People need transport. If we can’t sell cars using traditional financing models, how can we still get people into cars? As an industry, we’ve got to start thinking out of the box when it comes to getting our people – and our stock – moving. That could mean more accessible leasing, subscription and shared ownership models. But standard financing models alone won’t get us through the recession.
Make it easy for people to do business with you
Streamlining interactions between dealer, finance house and customer is critical. A TransUnion study found that half of consumers dropped out of a previous credit application process due to poor customer experience.
Optimising onboarding during applications means balancing consumer expectations against the need for identity verification, fraud prevention, proving creditworthiness and compliance. With South African consumers expecting their discretionary spending to fall, it’s more important than ever for dealers and lenders to consider the strengths and weaknesses of their onboarding journeys.
Get the valuations right
The valuation of used cars has always been a challenge for the industry. Today, ordinary consumers can easily access market-related values of vehicles through services like FirstCheck, which provides the current market value of the car, its full history and the legal status of the vehicle.
For the industry, we’ve got to be more transparent than ever in the way we value and price vehicles. Here, the 1Check app – which replaced the TransUnion Auto Dealers’ Guide late last year – remains the de facto source of information in the South African dealer automotive environment.
The app provides the industry with actionable, verified and robust view of current vehicle and customer data in real time, and brings much-needed consistency and a level playing field to all stakeholders, including dealers, banks, insurers and consumers.
It’s rough out there right now. But it’s also an opportunity for us as an industry to reconfigure ourselves for growth and relevance.