In a quest for insights into the trends and challenges shaping the retail motor industry, we engaged in a thoughtful exchange with Brandon Cohen, National Chairperson of the National Automobile Dealers’ Association (NADA). Through a series of questions, we sought to glean a comprehensive understanding of what lies ahead for retail in the dynamic year of 2024. Cohen’s expertise and perspective promise to illuminate the path forward for the retail motor industry in the coming year. “The year 2024 holds a complex tapestry of economic and geopolitical uncertainties, each thread woven with “what-if” scenarios that could significantly influence South Africa’s automotive landscape. We dissect key variables shaping the industry’s trajectory, offering a nuanced perspective on the intricate web of possibilities. From the stability of oil prices and currency fluctuations to the election-induced legislative landscape and global political dynamics impacting trade terms, the automotive sector faces a challenging journey ahead. As we stand on the brink of this new year, a comprehensive understanding of these uncertainties becomes paramount for stakeholders navigating the intricate balance between risk and resilience,” said Brandon Cohen, National Chairperson, NADA.
How would you describe the current state of the automotive retail market in South Africa?
The automotive market in South Africa is currently facing significant challenges, resulting in a strained environment. Over the past three months, there has been a noticeable decline in passenger vehicle sales. This downturn can be attributed to a combination of factors, including ongoing challenges with Eskom, elevated interest rates, and financially vulnerable consumers. The convergence of these issues has created a trying period for the automotive industry in the country.
What major trends or factors are currently influencing the automotive industry?
Several major trends and factors are currently shaping the automotive industry in South Africa. Consumer sentiment, fuel pricing, interest rates, power availability and logistics are key influencers. Consumer sentiment plays a crucial role in driving purchasing decisions, while the fuel price directly impacts operating costs for both consumers and manufacturers. Additionally, fluctuations in interest rates and logistical challenges contribute to the overall dynamics of the industry.
How do you anticipate economic conditions will impact the vehicle market in 2024?
The outlook for the vehicle market in 2024 will be intricately linked to broader economic conditions. The year is marked by elections in both South Africa and the United States, introducing an element of economic uncertainty. The run-up to elections often brings about political gesturing and the possibility of populist legislation, such as the National Health Insurance (NHI). The stability of the local political landscape, alongside resolving issues like load shedding through infrastructure improvements, will be crucial for sustained economic stability in the automotive sector.
How is technology shaping the automotive industry in South Africa, and what innovations do you foresee playing a significant role in 2024?
Technology serves as a vital enabler for the automotive industry in South Africa. In 2024, we can expect to see smarter vehicles with increased electronic features, though not fully autonomous. The landscape for electric vehicle (EV) charging will expand, and artificial intelligence (AI) is anticipated to extend its influence beyond General Purpose Technologies (GPT) into mainstream applications. The 2023 AI Expo Africa projections indicate a significant rise in the daily use of AI assistance by South African business people, highlighting the pervasive impact of AI on various sectors.
Do you expect a notable increase in the adoption of new energy vehicles or other alternative fuel technologies?
The adoption of NEVs and alternative fuel technologies hinges on factors such as price, charging infrastructure, and the availability of new options. Challenges like range anxiety, recharge time, and ownership costs persist and affect consumer adoption. The awaited government NEV policy is considered a linchpin for unlocking the full potential of NEVs in South Africa. Addressing issues surrounding the quality of fuel for internal combustion engine (ICE) vehicles is also a critical factor.
What changes in consumer behaviour are you observing, and how might these impact the types of vehicles consumers are interested in buying?
Evolving consumer behaviour is evident in a trend of downsizing purchases, extensive research into pricing and financing options, and heightened caution regarding
the interest rate cycle. These behaviours are shaping a market where consumers are more selective and financially conscious in their vehicle choices.
How might changes in regulations impact the car market in the coming year?
The automotive industry is poised to face regulatory changes in the coming year, with potential impacts on various fronts. We anticipate that the Budget Speech will offer insights into changes in income tax, VAT, and fuel levies, which could affect sentiment and affordability. Other potential regulatory changes include FICA restrictions, the initiation of the National Health Insurance framework, alterations to tax credits for medical aid, and the release of a government NEV policy. Are there specific areas where dealerships should invest or focus their efforts to thrive in the coming years? Dealerships should prioritise investments in power and water management, given the ongoing strain on infrastructure. Additionally, attracting, retaining, and upskilling staff is vital for the industry’s sustainability. Embracing the positives of a connected world, adopting omnichannel marketing strategies, and integrating Artificial Intelligence (beyond generative AI) are also areas that can contribute to thriving in the coming years.
How is the digital transformation impacting the automotive retail sector, and what role do you see it playing in 2024?
Digital transformation is significantly impacting the automotive retail sector, influencing consumer behaviour and interactions. In 2024, the digital landscape is expected to play an even more prominent role. Consumers increasingly rely on online platforms for researching vehicles, comparing prices, exploring financing options, and evaluating dealership experiences. The digital realm presents opportunities for dealerships to enhance consumer experiences and build lasting relationships.
What are the key challenges that you foresee for the automotive market in 2024?
Challenges for the automotive market in 2024 include the persistence of high interest rates, ongoing political and policy uncertainty, and geopolitical instability. These factors will collectively influence consumer sentiment and confidence in committing to new vehicle purchases, which, in turn, impact the industry’s potential for economic expansion and improved quality of life.
in South Africa, and what innovations do you foresee playing a significant role in 2024?
