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- Industry News
- 5 August 2025
South Africa's premium automotive sector has experienced unprecedented consolidation over the last two years, with multiple luxury brands restructuring their dealership networks in response to declining sales, economic pressures, and shifting consumer preferences.
While specific data on Lexus dealership consolidation remains limited in public sources, the brand's positioning within the broader premium market consolidation trend provides valuable insights into the challenges facing luxury automotive retailers.
The premium market decline:
The South African premium automotive market has witnessed a dramatic contraction, with luxury brands collectively experiencing a staggering 68% drop in sales between 2014 and 2024. According to industry data, luxury brands including Audi, BMW, Mini, and Mercedes-Benz sold approximately 74 015 vehicles in 2014, but this figure plummeted to just 23 881 units by the end of 2024. This collapse has fundamentally reshaped the dealership landscape across all premium brands.
BMW:
BMW has been at the forefront of dealership network restructuring in South Africa. The German manufacturer has significantly reduced its physical presence, with its dealer network shrinking from 55 outlets in 2015 to 46 by the end of 2024. This is a reduction of approximately 16%. This consolidation mirrors BMW's sales performance, which fell from 24 521 units in 2014 to 12 145 units in 2024, representing a 51% decline. The brand has focused on consolidating operations to reduce high inventory costs and improve operational efficiency in response to the shrinking premium market.
Lexus:
Lexus South Africa operates through a more limited network compared to its German competitors. The brand's positioning as a smaller player in the South African premium market, with less developed brand recognition compared to BMW and Mercedes-Benz, has likely influenced its dealership strategy. Lexus have confirmed that it now has a total of 14 dealerships in South Africa (down from 18 dealerships two years ago). It includes 4 flagship centres in Pretoria, Fourways, Umhlanga and Cape Town. The premium brand that is part of the Toyota empire also says there are some Toyota dealerships across the country that are equipped to service Lexus vehicles.
Volvo:
Volvo Cars South Africa has implemented perhaps the most aggressive consolidation strategy among premium brands. The Swedish manufacturer closed 12 showrooms, representing a 60% reduction in its dealership network. This drastic restructuring reflects Volvo's response to sustained market pressures and the need to maintain viable operations in a significantly contracted luxury vehicle market. It is however focussed on an EV future and is opening a brand-new dealership in the Eastern Cape.
Audi:
Audi has also joined the consolidation trend, announcing in April 2024 its decision to restructure its dealership network across South Africa. The brand cited "significant pressures in the premium automotive sector" and noted that market challenges and changing buyer preferences have necessitated a fundamental review of its business model. Audi's statement referenced the broader trend of consumers "buying down" to more affordable vehicle segments.
Mercedes-Benz:
While specific dealership closure numbers for Mercedes-Benz are not detailed, the brand has been part of the broader premium market decline. Mercedes-Benz, traditionally one of the strongest performers in the luxury segment, has faced similar challenges to its German competitors, with industry data showing significant sales reductions across all premium brands.
Market divers behind consolidation:
Several factors have contributed to this widespread consolidation:
Industry implications:
The consolidation trend represents a fundamental shift in South Africa's premium automotive retail landscape. Surviving dealerships are likely to serve larger geographical areas, potentially impacting customer service and accessibility. However, this consolidation may also lead to more efficient operations, better resource allocation, and improved profitability for remaining outlets.
The trend also highlights the resilience required in the luxury automotive sector, where brands must balance maintaining premium positioning with operational viability in challenging economic conditions. For consumers, this consolidation may result in reduced choice in terms of dealership options but potentially more focused and efficient service from surviving outlets.