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Dealerships are here to stay

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Automotive dealerships will not disappear anytime soon, despite the increasing trend of researching and buying vehicles online. This emerged during an inaugural thought leadership roundtable discussion, organised by NAAMSA, last month.

While the roundtable’s panellists, which included Autotrader’s CEO George Mienie, agreed that the digital age has transformed the way people shop, they argued there are several compelling reasons why brick-and-mortar car dealerships will continue to play a crucial role in the South African automotive industry.

Firstly, it was pointed out that the process of buying a car is inherently different from purchasing other consumer goods. “A vehicle is a significant investment, often the second-largest purchase a person makes after buying a home. As a result, the decision-making process becomes more complex and demands a higher level of trust and confidence,” said Minnie. “Physical dealerships provide an opportunity for potential buyers to interact with knowledgeable sales representatives, ask questions, and receive personalised guidance. The personal touch is invaluable in establishing trust and cultivating long-term customer relationships,” he elaborated.

Minnie added that test driving a car remains a critical aspect of the car buying process. “While online research can provide a wealth of information about a vehicle’s specifications, features, and reviews, there is no substitute for experiencing a car first hand. Physical dealerships allow customers to see, touch, and test drive vehicles before making a decision. This ensures that buyers are confident in their choice and satisfied with their purchase.

Moreover, the automotive industry is not exempt from the requirement for post-purchase support and services. And car owners require regular maintenance, repairs, and access to authentic parts and accessories, too. Physical dealerships serve as hubs for essential services, providing customers with a convenient and reliable source of support throughout the lifespan of their vehicle.

Even Tesla, a disruptive company that has revolutionised the electric vehicle market, understands the importance of physical retail locations. While Tesla has embraced online sales and direct-to-consumer distribution, its showrooms and service centres are strategically located in high-traffic areas. They provide potential buyers with the opportunities to experience their vehicles first hand, while also allowing existing owners to access expert service and support.

This hybrid approach demonstrates that even the most innovative companies recognise the enduring relevance of physical dealerships in the automotive industry.

“So, while the digital age has undoubtedly transformed the way we research and purchase cars, traditional dealerships will remain crucial in the automotive industry. The unique nature of the car buying process, the importance of test drives, and the need for ongoing support and services all contribute to the enduring relevance of physical car dealerships.

“As exemplified by Tesla, a successful automotive business model is likely to involve a combination of online and offline strategies. This ensures that customers receive the best possible experience throughout their car ownership journey,” concluded Mienie.

NAAMSA will hold three more roundtable discussions on various topics that are crucial to the automotive industry throughout the year.