All over South Africa Motor Dealers are having to put up with lower margins on the cars that they sell. Additional to this stock comes at a premium. Legislation is also making trading tough and dealers are struggling to comply with all. Most of the time we are finding dealers are ill informed and are risking their business due to non compliance.
Fact is that in order to comply correctly, it is not expensive and does not require a change of focus. There are simple solutions that allow dealers to continue to focus on buying and selling cars and everything else can be taken care of.

Autosure have launch an extensive range of products to assist motor dealers.

“We have recently launched a Warranty Booster via Mechprotect” says Greig Hains, General Manager at Autosure. “The Autosure Warranty booster boosts any warranty, that a dealer currently sells, by up to R10 000 depending on the option selected. This allows dealers to satisfy customers when there is a claim that is not 100% covered by the underling Warranty that they have purchased. The Booster works with any Warranty available in South Africa. The booster also assists where the underlying warranty pays out less for wear and tear or overheating. Dealers are loving this as it protects their current warranty investments”.

Low Dealer Margins and Overpriced Trading
Due to the current scarcity of Retail Stock dealers are, at times, overpaying to fill their floors. A group of very shrewd motor dealers have taken the positive decision to buy this stock and are ensuring that they have the correct 2nd gross products that can be added to the sale thereby making up and sometimes exceeding the margins they used to make.

Greig Hains says that they have noticed this and have designed a number of non-insurance paper products with healthy margins. “The Autosure Assist Program retails for R895 for a 2 year membership and the dealers cost is R285. This makes the dealer a 68% margin of R610 and takes away any hassles that the receiving a midnight call should a car have broken down.” Autosure also have a Chip and Dent Maintenance Plan for dealers. One can understand why this has proven to be a winner as it allows the customer to claim every month for as long as 72 months for up to R3000 for Chips, Scratches and Dents. There are no restrictions to the size, width or depth of the Scratch, Chip or Dent. Dealers margin is again very healthy and the product is simple and easy to understand for customers and sales people who sell it.
The other major benefit to these products being non-insurance paper products is that a dealer need not have to worry about the legislative requirements of collecting Insurance premium and complying with FSP or IGF. Paper products cost nothing to start with.

“We invite any independently owned dealer, big or small, to talk with us. We have an extensive range and we understand what dealers are going through. We have no intention of trying to reinvent the wheel or take away from dealers what is working for them or what they have been doing for years already. We want to help and add to your business for you and your customers benefit”, is the invitation from Greig.

What of the various legislative requirements that dealer need to comply with. The list goes on and on.

1. All establishments operating in the retail motor industry are obligated to register with the Motor Industry Bargaining Council and operate in terms of the Main Agreement for the Motor Industry. This collective Agreement stipulates the minimum prescribed wages and working conditions in the industry which are to be adhered to by both the employers and employees alike;

2. In terms of the Financial Advisory and Intermediary Services Act No. 37 of 2002 dealerships that provide financial advice and/or sell insurance related products in respect of motor vehicle sales have to register with the Financial Services Board as financial service providers and meet various arduous compliance requirements. In addition, every employee within motor vehicle dealerships who interact with the consumer and provide financial advice and or sell the insurance related products in respect of motor vehicle sales has to comply with the very strict qualification criteria and operational requirements. This has recently been made more difficult with the introduction of Regulatory Exams which are far reaching and do not only focus on motor risk related business. The FSB has also issued a very onerous document entitled “Treating Your Customers Fairly Road Map: Financial Services Board”;

3. In terms of the Financial Intelligence Centre Act of 2001 motor vehicle dealers are classified as “reporting institutions” and are obliged to report suspicious and/or unusual transactions to the Financial Intelligence Centre. There is now a move afoot to make motor vehicle dealers accountable institutions thus increase compliance and report criteria on dealers;

4. Motor vehicle dealers that have entered into agreements with the various financial institutions for the provision of finance for customers to purchase motor vehicles are obliged to comply with the requirements of the National Credit Act No 24 of 2005. The same employees as mentioned in paragraph two, are required to pass a further examination before receiving accreditation by the financial institutions;

5. Motor vehicle dealerships are required to be registered and licensed in terms of the National Road Traffic Act of 1996 and the National Road Traffic Regulations of 1999 as amended. This all relates to the registration and licensing of vehicles in terms of the National Traffic Information System (eNATIS).

6. Dealers have to register as VAT vendors and in terms of Section 20(8) and 16(3) of the VAT Act dealers when trading in a pre-owned vehicle, have to complete a VAT declaration form which records most of the detail relating to the vehicle and customer;

7. The Access to Information Act and the laws relating to Privacy of Information also has a bearing on the industry;

8. Dealers also have to comply with the provision of the Companies Act and meet all corporate governance and accounting standards. Recent changes have made this Act more onerous for businesses;

9. Dealers comply with the current Second-hand Goods Act. However, many of the provisions which were drafted many years ago are out of date and do not conform to the changes that had taken place in business practices and market conditions. Dealers therefore find it costly and difficult to meet every requirement. It is for this reason that the Act needs to be amended. It should also be noted that for many years motor vehicle dealers were excluded from the Act, but were reinstated some eight years ago without consultation;

10. The Consumer Protection Act which came into effect on 1 April 2011 governs the relationship between dealers and their customers in terms of the disclosure of information and ethical trading. The requirements here again are burdensome which many unintended consequences for the industry;

11. New motor vehicle dealers who also have pre-owned vehicle departments and or stand-alone facilities operate under extremely strict franchise agreements and operating standards, as stipulated by the motor manufacturer and or distributor;

12. e-Tolling and AARTO will necessitate additional administration and add to dealers operating costs;

13. Five metros were spearheading a proposal for a tax on business to help municipalities raise up to R19 billion in additional funds.
    Contact Autosure for any assistance on any of the above matters.
    Info@autofi.co.za or call our Head Office at 021 715 5496 who will get the local Manager to contact you directly.