Volvo Car South Africa (VCSA) has confirmed to TopAuto that it intends to close 12 out of its 19 dealers in the country as part of a “long-term brand strategic realignment.”
The company said it remains committed to the South African market but that it will be undergoing several changes to strengthen its position in the country, among them dealership closures, new marketing tactics, and a revised commercial strategy.
The news comes after several reports of rumoured Volvo retailer closures across South Africa.
A comprehensive piece by IOL alleged that VCSA has already begun issuing notices to implicated outlets and that it unexpectedly collected vehicles from dealer showrooms ahead of agreed-upon closure dates, leaving them without any cars to display to passersby.
Additionally, the article references a dealer manager who is highly discontent with the move as they said they invested some R10 million into their facility over the past four years, and expect to receive only around R500,000 in return in part buy-backs following the closure.
Meanwhile, the Motor Industry Staff Association (Misa) criticised the strategy realignment, claiming that VCSA didn’t inform it of its plans despite Misa representing over 66% of Volvo’s local workforce.
Misa noted that the sudden news stirred unrest among its members as they are uncertain how their livelihoods will be impacted by VCSA’s restructuring, a sentiment that was shared by the National Union of Metalworkers of South Africa, which also represents employees in the manufacturing divisions.
Volvo responds
TopAuto relayed these claims and rumours to VCSA to find out what’s going on behind the scenes.
The company kindly clarified that during 2024, top brass visited all Volvo dealerships across the nation to evaluate various aspects important to the brand.
The decision on which dealerships to close was “based on those aspects as well as the sales potential for each location,” said VCSA.
The official closure dates for the different locations were, or will be, agreed between Volvo and the specific dealer, and customers will be informed once an official date is decided upon.
“We expect to conduct all the closures necessary by the end of Q2,” said VCSA.
VCSA neither confirmed nor denied that it collected vehicles from dealers before agreed-upon closure dates.
“Volvo changed to a wholesale business model from February 1st and it is valid for all dealerships nationwide,” it said when asked about this claim.
“The network was communicated to beforehand.”
The statement “changed to a wholesale business” refers to how Volvo previously operated on a consignment basis, which meant retailers first sold vehicles and used the money received to then pay VCSA for said vehicles.
The wholesale model now reportedly requires dealers to purchase cars from VCSA before they can list them for sale.
VCSA added that it is consulting with the affected dealers surrounding the loss of investments into their facilities and the loss of income derived from Volvo car sales.
“We will conduct a fair agreement with our dealer network, that might include compensations when applicable,” it said.
“It may be worth noting that VCSA does not own the showroom and other such assets which will remain the property of the dealer.”
The impact on job losses is unclear at the moment.
VCSA said that none of its employees are expected to lose their jobs as a result of the restructuring, keeping in mind that people working at dealerships technically do not qualify as VCSA employees.
“We are working with the affected dealers to mitigate negative effects on jobs, despite the fact that they are not Volvo employees and we have no obligation to do so,” said VCSA.
“We already see that affected employees are being absorbed by their own group or by other Volvo dealers that will remain open.”
As far as the remaining dealers are concerned, VCSA said that its vehicles will remain available at four groups in the country:
- CMH
- SMH Bedfordview
- Tom Campher Motors
- Rola Motors Somerset West
These retailers are located in seven different locations across Gauteng, KwaZulu-Natal, and the Western Cape.
It said it will “evaluate further expansions and other locations as the business grows.”
VCSA further emphasised that customers will remain unaffected by the strategy shakeup.
“There will be no effect for customers. Currently warranty and service plans remain active and we will offer solutions to provide the best service possible to our customers,” said VCSA.
“A dedicated channel exists in our customer care team to handle their needs.”
It also doesn’t anticipate the exodus of retail locations to have an impact on the sales of Volvo vehicles.
“We are expecting to keep the same volume for 2025 as we had in 2024,” said VCSA.
Looking ahead, Volvo will continue to expand its South African lineup with new product launches scheduled for 2025, the company said.
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