The 3 major car brands closing dealerships in South Africa

Audi has joined BMW and Volvo in the decision to restructure its dealership network across South Africa due to the shrinking premium market and changes in buyer preferences. 

In a statement published in April, Audi noted the premium automotive sector has faced significant pressures in recent years.

The automaker added that these pressures include a notable buying-down trend driven by high inflation, rising interest rates and exchange rate weakness.

“This has intensified both affordability pressures on the consumer side and pricing pressures on the manufacturer side,” said Audi. 

“This has prompted buyers to explore alternative options from new brand entrants primarily targeting the price-sensitive volume segment with well-equipped vehicles.”

Audi highlighted that the lack of a regulatory framework and supportive incentive schemes from the South African government exacerbates these challenges. 

“This is in contrast to the support available for battery electric vehicles (BEVs) in other developed countries, which could further enhance market growth,” said Audi. 

The impacts of these market shifts are evident in the shrinking premium vehicle segment in South Africa. 

This is illustrated in the data from Lightstone Auto, which shows the premium vehicle sector has contracted to nearly a third of its size compared to a decade ago.

In 2014, luxury brands such as Audi, BMW, Mini, and Mercedes-Benz collectively sold around 74,015 vehicles in South Africa.

As of the end of 2024, this number had dropped to 23,881. This translates to a 68% drop in sales, highlighting the staggering number of South Africans who no longer consider these vehicles an option.

In response to this market evolution, Audi announced that it has proactively started implementing an “optimised footprint strategy in South Africa.”

Audi failed to comment on how many of its dealerships in South Africa would be affected by the new strategy. 

However, the Motor Industry Staff Association (MISA) told Engineering News that it is aware of at least four Audi branches that will close in the coming months.

Despite these shifts, Audi South Africa noted that it remains committed to adapting to market conditions while ensuring premium service delivery to its customers.

Audi is not the only premium manufacturer affected by shifts in the South African market. BMW and Volvo have also reduced their dealerships or announced similar strategies.

BMW

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 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 contributed to the reduction of its network, the increasing importance of affordability in South Africa’s market is also a major contributor.

BMW further explained that the exchange rate significantly contributed to the reduction in vehicle sales over the period.

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,” the BMW spokesperson said.

“This has placed the premium segment into a new price bracket, encouraging a buying-down trend.” 

Volvo

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

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

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. Customers will be notified accordingly. 

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