by Wayde Carroll, Head of Automotive for Galetti Corporate Services.
The automotive industry has long been a cornerstone of South Africa's economic landscape, driving job creation and bolstering the GDP. However, the sector has faced immense challenges in recent times, brought on by the COVID-19 pandemic and resulting economic downturn. NAAMSA’s recent CEO Confidence Index reflects these challenges. 20% of respondents reported a decline in domestic new vehicle sales and 43% expressed a negative sentiment on new vehicle business conditions. Galetti Corporate Services (GCS) works closely with dealerships to evaluate the commercial real estate side of their operational expenses. A common observation is that potential cost-saving avenues like regearing lease agreements and reducing occupied space often remain untapped. As the industry battles to retain its vitality, a key lifeline emerges: Dealership Space Optimisation.
Optimising Dealership Space
Adapting to cost-saving needs, dealerships like Mercedes South Africa are revamping their approach. Embracing a 'destination concept dealership,' they're trimming down their square footage, focusing on an enhanced customer experience within a smaller (250m2), luxurious space that can fit two to three cars. These premium outlets are often located in trendy neighbourhoods rather than industrial or commercial areas.
However, dealerships still need a safe location to house their high-value stock, and some are turning to their affiliated Accident Repair Centres as a useful storage location.
Important to note that while this approach can reduce monthly rental costs, dealerships must consider the security and insurance-related considerations associated with housing expensive vehicles off-site.
Driving Innovation through Technology
Other dealerships are tackling the space-saving challenge by integrating technology into the showroom. Emerging technology trends that are revolutionising dealerships around the country include:
- Virtual Reality (VR): Customers can use immersive VR headsets to explore a vehicle’s interior and exterior, configure their desired features and enjoy virtual test drives.
- Augmented Reality (AR): AR applications overlay digital information onto physical vehicles in the showroom. Here, customers can access more information about vehicle specifications by simply scanning a code.
- Interactive Digital Configurators: These allow customers to customise their preferred car models in terms of colour, trim, accessories, and features, providing a visual representation of how the chosen options will appear on the vehicle.
The Road Ahead
With the prospect of recovery on the horizon, the clear path forward involves rethinking premises with the help of the expert leasing and advisory services of GCS. The automotive sector's ability to adapt and capitalise on these opportunities will be the deciding factor in its future success.
Looking to regear your lease and rethink your auto premises? Contact our expert GCS team today at https://galetti.co.za/contact-us