Major car brand will close over 60% of its dealerships across South Africa

Volvo Cars South Africa (VCSA) has confirmed that it plans to reduce its dealership network from 19 to just seven across the country.

VCSA previously noted that this decision, part of a broader strategic realignment, aims to align the brand with global trends while enhancing the overall customer experience. 

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

Announced at the end of February, the restructuring has sparked some backlash, particularly from the Motor Industry Staff Association (MISA), representing more than 66% of Volvo’s dealership employees. 

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

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

In response to concerns about employment, Volvo Cars South Africa reassured BusinessTech that no employees are expected to lose their jobs due to the restructuring. 

“We are working with the affected dealers to mitigate negative effects on jobs, even though they are not Volvo employees, and we have no obligation to do so,” said a VCSA spokesperson.

As for the remaining dealerships, VCSA confirmed that its vehicles will still be available at four dealership groups: CMH, SMH Bedfordview, Tom Campher Motors, and Rola Motors Somerset West. 

VCSA added that these retailers are strategically located in seven different areas across Gauteng, KwaZulu-Natal, and the Western Cape.

To determine which dealerships would be retained, VCSA conducted a nationwide evaluation throughout 2024, considering various factors vital to the brand, including sales potential. 

“The decision on which dealerships to close was based on those aspects as well as the sales potential for each location,” said VCSA. 

The closure dates for the affected dealerships are being finalised in discussions between Volvo and individual dealers, with customers to be notified accordingly. 

The company expects to complete the full restructuring process by the end of the second quarter of 2025.

Acknowledging the impact on affected dealers, VCSA stated that it is engaging with them regarding financial losses resulting from the discontinuation of Volvo sales. 

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

It also clarified that VCSA 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 to BusinessTech the company’s long-term commitment to the local market. 

“Volvo Car South Africa is restructuring its operations as part of a long-term brand strategic realignment,” said Yagi.

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

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.