Business

Motor industry to government: 'Please let us open for business under level 4'

Motor industry to government: 'Please let us open for business under level 4'

The motor industry is urgently lobbying government to allow for the reopening of car dealerships , when SA enters level 4 of lockdown.

This request comes after ministers involved in the national command council announced on the weekend that dealerships would remain closed in the new phase of lockdown.

As part of President Cyril Ramaphosa’s phased approach to lifting the Covid-19 lockdown, a government schedule on Saturday announced that local car factories will be able to start assembling vehicles and components again when level 4 restrictions are implemented from Friday. The proviso is that there be a maximum 50% of employees on site.

Emergency motor repairs will also be permitted to operate under level 4. However, motor dealerships will only be allowed to resume the selling of vehicles when SA moves to level 3, while general repairs and servicing will only be allowed under level 2.

The published schedule is currently in draft format and open to comment and consultation, with final schedules and regulations to be gazetted on Wednesday.

The National Association of Automobile Manufacturers of SA (Naamsa), supported by the National Automobile Dealers’ Association (Nada) and National Association of Automotive Component and Allied Manufacturers (Naacam) submitted a business case to have the automotive retail sector, which includes sales, maintenance, repairs, parts supply, and all other related services to be classified under level 4 from Friday.

“The country’s dealership network is an integral part of the overall automotive value chain and cannot be viewed as a separate entity,” said Naamsa.

“Allowing vehicle manufacturing facilities to operate under level 4 as proposed, cannot be done in isolation of the dealership network. Vehicle manufacturers produce vehicles on the strength of orders received from the dealers”.

The association further stated that: “Unlike other manufactured goods and services, vehicles are bespoke commodities and are produced based on customer preferences. Typically, not all vehicles will come out exactly the same at the end of the line because they have been produced and customised to individual customer needs. These specifications are sourced and confirmed at dealership level."

Once the risk-adjusted measures are in place, Naamsa proposed for the scaling up to phase 2 to increase the workforce to 75% by May 11 and move to phase 3 with 100% of employees by May 25.Coronavirus by Tiso Blackstar Group - Infogram

AutoTrader, the online vehicle sales portal, made a separate submission on Monday calling for vehicle sales to move from level 3 to level 4. AutoTrader is a proxy for consumer vehicle demand with over 35 million searches per month on the online platform.

“Physical showrooms need to be opened at level 4, under strict conditions in order to stimulate one of the largest contributors to the SA economy,” read the submission.

It added that following the president’s address on Thursday, AutoTrader has seen the biggest recovery in consumer demand for vehicles since lockdown.

“Consumers who are cash strapped and need money to buy food for their families would need a way in which to generate cash by selling their vehicles. With vehicle retail shut, this can’t happen,” it noted.

“AutoTrader is experiencing an increase in demand for vehicles under R200k. This shows appetite for consumers to downgrade their vehicles and potentially free up cashflow to feed their families,” said AutoTrader.

It argued that vehicle retail showrooms are not like shopping centres or restaurants and can be controlled much more effectively with strict social distancing regulations including appointment-based visits to the dealership, restrictions on how many consumers may visit retail showrooms at any one time, and delivering the car to the consumer rather than having the consumer visit the dealership showroom.

Mark Dommisse, national chairperson of Nada, urged government to consider the automotive retailers as a key component in getting all sectors operational.

“When vehicle factories resume operations they will require channels in which to distribute the products they assemble, he said.

“Limiting demand to export only is unnecessarily prejudicial to the factories ... interrupted supply into the local market will cause lost sales, which inevitably will lead to lost jobs.”