Luxury car dealer closures have dominated headlines in South Africa in recent months, and now Audi has further stirred the pot.
In a recent press statement titled Audi South Africa adapts to market challenges and strengthens customer-centric approach, the German marque made several vague statements on how it’s adapting to the prevailing trend of consumers buying down in the automotive sector.
Among its initiatives to safeguard market share have been the introduction of several special-edition models, expanded maintenance plans, and new guaranteed residual value options.
One section of the press statement, with the subheading Evolving the retail experience, was particularly interesting.
Audi speaks about how it was impacted by the Covid-19 pandemic which influenced consumer behaviour and dealership strategies alike.
To that end, Audi South Africa is “proactively aligning its approach with new market realities and customer expectations,” it said.
The following sentence read: “To reinforce its retail presence and ensure long-term partner viability, the company has started to implement an optimised footprint strategy that balances meaningful customer experiences with operational efficiency.”
“The initiative is collaboratively agreed, supported, and implemented together with the brand’s investors and retail partners. Scaled retail concepts and increased digital integration will support dealer partners in managing costs while maintaining high service standards for consumers.”
Further down, the company also said that “in cases where adjustments have been or will be made to specific areas within the retail network, customers will be advised proactively and provided suitable alternatives.”
“All Audi customers affected by the current changes have been contacted and informed of their alternatives as all warranty, service, and maintenance policies remain fully intact.”
TopAuto immediately reached out to Audi South Africa to seek clarity behind these statements as they can be interpreted in many ways.
We asked directly whether they mean that the automaker is planning to shutter dealers, and if so, how many.
“Audi South Africa has no further comment on this matter,” a spokesperson for the brand promptly responded.
Surely, if no closures were in the pipeline, Audi would have said so to keep rumours from running rampant and its dealer partners at ease.
It furthermore went to extreme lengths to keep customers calm by repeatedly ensuring them their after-sales agreements will remain in place.
More than once, Audi also said that customers will have “suitable alternatives” should they be influenced by whatever is going on behind the scenes.
This suggests, although not confirms, that select Audi outlets are on the chopping block in South Africa.
Some may have already been closed, if we consider Audi said: “where adjustments have been or will be made to specific areas within the retail network.”
Exodus of luxury car dealers in South Africa
Volvo recently made waves when it announced it would be closing 63% of its South African dealer network, with only seven retail locations to remain once the dust has settled.
It confirmed to TopAuto that over the course of 2024, top brass visited all Volvo dealerships across South Africa to evaluate various aspects important to the brand.
They subsequently chose to decommission 12 of these locations “based on those aspects as well as the sales potential for each location,” the company said.
While it didn’t divulge the motivation for the extreme brand realignment, it appears that Volvo is setting itself up to be the leader in the electric vehicle (EV) space.
The Swedish automaker is going all-electric by 2030 and has chosen to maintain a presence in the provinces of Gauteng, KwaZulu-Natal, and the Western Cape.
These locations have the highest rate of EV adoption in the country as well as the most complete supporting infrastructure.
For customers outside these areas, Volvo will still provide an online store through which they can purchase a vehicle and get it delivered to their doorstep.
Meanwhile, TopAuto recently discovered that Audi rival BMW shaved its dealer network by nine locations between 2015 and 2024 amid a boom in popularity of Chinese and Indian autos.
Over roughly the same period, the German nameplate’s annual sales dropped from 24,521 in 2014 to 12,145 in 2024.
A spokesperson for BMW said the dealers closures were motivated by a number of factors, including:
- Trading conditions
- Scaling down to service-only operations
- Consolidation to achieve operating efficiencies
Furthermore, they highlighted that the poor performance of the rand over the last decade was instrumental to the drop in sales experienced.
In 2013, the Rand to US Dollar rate hovered around R10.20/dollar versus the current R18.93/dollar.
“Therefore, all brands needed to increase vehicle prices above normal inflationary and production cost increases, which also placed the premium segment into a new price bracket, encouraging a buying-down trend,” the BMW spokesperson said.
“For BMW South Africa, our business model has stabilised over the past five years and we have shown two consecutive years of growth.”
The spokesperson explicitly said that BMW’s sales have “not been noticeably affected by Chinese and Indian importers,” nor have they influenced the dealership closures.
“As mentioned, our business model has been stable for five years, our retailer network is healthy, and, in the premium segment where BMW trades, we continue to lead the market share,” they said.
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