Embracing ESG: paving the path to sustainable dealerships

"In today's ever-evolving business environment, the automotive industry faces a pivotal moment of transformation. What was once a mere blip on the radar has now emerged as an undeniable force reshaping how we operate our franchised motor dealerships," says Brandon. Sustainability is now a fundamental requisite for ongoing success. ESG plays a pivotal role in ensuring the longevity of businesses by providing tangible measures of performance.

He explains that in the modern landscape, a vehicle dealership operates a new car business, used car business, Finance & Insurance business, workshop business, parts business and an administrative function.

This necessitates a firm grasp of legislative requirements within the organisation to ensure full compliance with a myriad laws applicable to the operations of a dealership. It can be costly if dealer personnel are not familiar with the requirements and able to implement them.

"ESG in the retail automotive space can be as simple as looking at the immediate Environmental requirements such as dealers moving to energy-saving lamps and timers or sensors and looking into greener energy solutions, ensuring the dealer has plans to hire, train, upskill and retain a diverse workforce and complying with laws and regulations to avoid reputational and financial damage to the business Brandon advises.

He highlights how a notable advantage of an effective ESG programme in a retail motor dealership is the enhanced trust it builds with consumers during transactions. It mitigates potential issues that may arise during or after these transactions, a crucial factor given the evolving financial and banking regulations.

"Even in regions like the USA, where ESG has been a highly politicised topic, surveys indicate that most people believe large corporations should consider social issues, environmental impact and gender-related matters. NADA continues to advocate for the establishment of 'living' ESG programmes among its members to benefit both businesses and customers alike.

"ESG integration should become a way of life for dealerships, securing their long-term prosperity and enhancing the financial outcomes for their employees," Brandon concludes.

• NADA is the professional body representing vehicle franchise motor dealerships in South Africa. It has 1 450 members, accounting for 85% of new franchise dealerships. The country has approximately 1 600 new franchised automotive dealerships providing direct employment to 58 000 workers with a multiplier effect of providing indirect employment to more than 50 000 personnel.