Global car brand closing large number of dealerships in South Africa

Volvo Cars South Africa will reduce its dealership network from 19 to just seven nationwide as part of a “long-term brand strategic realignment”.

Four motor retail groups in South Africa will continue to carry Volvo cars: CMH, SMH Bedfordview, Tom Campher Motors, and Rola Motors Somerset West.

These retailers are located in seven different locations across Gauteng, KwaZulu-Natal, and the Western Cape.

The automaker said it remains committed to the South African market and will undergo several changes to strengthen its position in the country. This included dealership closures, new marketing tactics, and a revised commercial strategy.

Volvo told BusinessTech that its decision aims to align the brand with global trends while enhancing the overall customer experience.

The manufacturer also stated that the move reinforces Volvo’s commitment to electrification, digitalisation, and sustainability, prioritising premium, consistent service through strategically located, high-performing dealers.

Volvo announced at the end of February that it would be conducting a strategic dealer network restructuring in South Africa.

This led to backlash from the Motor Industry Staff Association (MISA), which represents over 66% of Volvo’s dealership employees.

MISA criticised the company for failing to consult the union beforehand, saying it caused panic among its more than 700 members.

The union also claimed that Volvo South Africa’s actions violate Section 189 of the Labour Relations Act, which mandates consultation in cases of potential job losses.

Volvo has said no employees are expected to lose their jobs due to the restructuring. However, people working at dealerships technically do not qualify as 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,” Volvo said.

“We already see that affected employees are being absorbed by their own group or by other Volvo dealers that will remain open.”

Volvo told TopAuto that the company’s top brass visited all its dealerships in South Africa 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,” it said.

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.

Volvo said it expects to conduct all the necessary closures by the end of the second quarter of the year.

Acknowledging the impact on affected dealers, Volvo said it was engaging with them regarding financial losses resulting from the discontinuation of sales.

“We will conduct a fair agreement with our dealer network that might include compensation when applicable,” the company said.

It also said Volvo Cars South Africa does not own showroom properties or dealership assets, which remain the responsibility of the dealers.

Felipe Yagi, Head of Marketing & Communications at Volvo Car South Africa, reaffirmed the company’s long-term commitment to the local market.

“We are fully committed to the South African market, as demonstrated by continued investments in electrified mobility and the introduction of new models,” said Yagi.

Yagi highlighted the success of the Volvo EX30, which was the best-selling electric vehicle in 2024, further solidifying the brand’s position as a leader in the country’s EV market.

He also outlined Volvo’s expansion plans for South Africa, which will see its presence continue in the local market.

“Looking ahead, Volvo will continue to expand its local lineup, with four different launches scheduled for 2025, starting with the new EX90 that has just arrived in the country.”

Despite the dealership restructuring, VCSA reassured customers that service levels would remain unaffected.

“The Volvo customer and their experience is of vital importance to us. This restructuring will not affect customer service,” Yagi said.

“Warranty and service plans remain active, and we will offer solutions to provide the best service possible to our customers. Our customer care team has a dedicated channel to handle their needs.”

While the decision to reduce the dealership network has been met with mixed reactions, VCSA noted that it remains focused on refining operations and enhancing its market positioning in South Africa.