But those investments are made by a handful of manufacturers whose purpose is to defend global competitiveness for South Africa amongst their Original Equipment Manufacturers (OEMs) and export the vast volume of those vehicles.

Whilst this generates significant amounts of foreign revenue for the country, motor dealers are also important contributors to job creation and the delivery of the motor industry to consumers and business.

Over 1600 franchised dealers are members of the National Automobile Dealers’ Association (NADA), never mind the independents serving those older vehicles in South Africa’s estimated 12m-vehicle car parc.

NADA says with dealer representation of over 55 vehicle brands available in South Africa, their contribution to the economy is significant. As more Chinese brands enter the market, the number of retailers is set to increase, despite the consolidation of facilities as the customer journey evolves.

Purely, the VAT across all these businesses provides a sizeable contribution to the fiscus. According to naamsa, The Automotive Business Council, the seven OEMs manufacturing vehicles in the country contributed R14.6 bn in VAT and duties in 2022. This amount includes the tax payable on new vehicle sales through retailers amongst the host of other items in the extensive value chain.

By extension, the local taxes, such as property rates on physical dealer infrastructure contribute directly into the local economy surrounding each facility.

New vehicle sales in 2023 recorded 532 098 registrations across passenger and light commercial vehicles (the majority of the volume) as well as medium, heavy, extra-heavy and bus sales. Of those, 446 570 were retailed off showroom floors through the dealer channel.

While far away from economic science, it provides some level of insight into the value of South Africa’s dealer network and its contribution to the fiscus. Of course, new vehicle sales are only one factor of the dealer business, with the pre-owned sales floor, workshop, parts and accessories, as well as finance and insurance, all contributing to the bottom line.

All those profit centres within a dealership require resources to deliver and so the employment value chain is vast. This not only provides spending power within communities in support of household budgets, but also provides income tax revenue for the country and consequent impact for insurance providers and investment houses investing earnings for future savings.

It is estimated that the multiplier across the entire value chain is well over 1 000 000 people.

Extend that network into its supply chain and the imprint of the retail motor industry is monumental: the necessity to move parts around by logistics, financiers, fitment centres, product suppliers, fuel stations, service and repair centres as well as crash centres, stationery requirements and catering, computers, tooling and equipment.

Whilst economic pressures and the evolving customer journey are providing for a level of consolidation in dealer facilities, South African showrooms are amongst the most lavish in the world. They meet stringent OEM brand standards and aren’t cheap to build.

That investment into the property sector is equally significant, ranging anywhere from R8 million up to R150 million on ultra luxurious new facilities, marking another sector benefiting from the dealer economy.

The footprint of economic activity surrounding a dealership is vast, stimulating the local economy and contributing to the national fiscus. The overall contribution of the motor industry to GDP runs at just under 5%. Retail accounts for approximately 2.1% of GDP, making the dealer economy a significant contributor to national success.