Another major car brand closing dealerships across South Africa

Over the past nine years, the luxury German car brand BMW has slowly reduced its dealership network in South Africa.

In 2015, BMW reported 55 dealerships in South Africa. However, as of the end of 2024, this number stands at 46, revealing the closure of nine dealerships over the period.

A BMW spokesperson explained to TopAuto that multiple factors contributed to the 16% reduction in its dealership network.

They explained that the main factors included the country’s current trading conditions, scaling down to service-only operations, and consolidation to achieve operating efficiencies.

While all these reasons played a part in the reduction of its network, sales numbers and the increasing importance of affordability in South Africa’s market seem to be major contributors.

Due to economic headwinds over the past decade, prospective vehicle owners have turned away from luxury cars to more affordable alternatives that offer better value for money, such as cars from Asia.

Sales numbers over the last ten years show a declining demand for luxury cars in favour of cheaper alternatives in South Africa.

Data compiled from Lightstone show that BMW reported 24,521 sales in 2014, a number that fell 51% to 11,989 by the end of 2024.

The data also revealed that other luxury brands, such as Mercedes-Benz and Audi, haven’t been spared from the decline either, with both showing worse sales numbers than BMW.

The biggest loser was Mercedes-Benz, which dropped 82% to 5,048 sold units in 2024 from 28,993. Audi followed, with a 70% decline in sales over the same period.

In contrast, vehicles from Asia—such as Chery, Haval, and Suzuki—have seen massive growth over the same period.

In 2014, these three car brands collectively sold 8,127. This has increased by a whopping 1,000% to 89,416 in 2024.

Suzuki saw a 776% increase in sales, Chery saw a 1,435% increase, and Haval experienced a remarkable 3,029% increase.

The National Automobile Dealers’ Association (NADA) told BusinessTech that this trend is due to the price-sensitivity shift in the South African market over the years.

“The South African vehicle market is increasingly price-sensitive, with affordability remaining a challenge due to high inflation, interest rates and fuel costs,” said NADA.

“Most buyers are now shopping in the sub-R350,000 range, where Chinese brands offer strong perceived value at an accessible price point.”

BMW further explained that a big contributing factor to the reduction in vehicle sales over the time period was the exchange rate.

In 2013, BMW noted that the Rand to US Dollar rate hovered around R10.20/dollar, compared to the current R18.26/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.”

BMW is not the luxury brand to have closed dealerships across South Africa as Volvo has also announced plans to conduct a “review” of its local dealership network.

At the end of February, the company announced it would conduct a strategic dealer network restructuring in South Africa.

Volvo noted that the restructuring is part of its strategy to align with global trends and enhance customer experience. It focuses on electrification, digitalisation, and sustainability.

The company hasn’t disclosed the finer details of the reshuffling, but the expectation is that it will include a noticeable reduction in the number of dealers.

While no details were given about the number of dealerships that will be impacted by the review, MSN reported that multiple sources indicated that the total will be cut from 19 to just seven new vehicle sales facilities.

These remaining facilities are said to only cover the country’s three major metropolitan areas, including Joburg, Cape Town, and Durban.