Johannesburg – South Africa’s luxury vehicle sector is witnessing a notable shift as Audi, BMW, and Volvo scale back their dealership presence, prompting the question: Will they transition to online sales?

This shift mirrors a global trend towards direct-to-consumer (DTC) sales.

In the United States, Volkswagen’s Scout Motors is set to completely circumvent dealers for its electric vehicles (EVs) when they launch in 2027, sparking pushback from traditional retailers like Marc White.

A Bloomberg report indicates that second-generation dealer White was turned down when he proposed a $10 million showroom in South Carolina, USA, intended for selling Volkswagen’s new EV line.

Eager to be among the first to offer these vehicles, White discovered that Volkswagen AG plans to entirely bypass traditional dealers for its Scout Motors brand, opting to sell directly to consumers upon the launch of electric pickups and SUVs in 2027.

In response, White has testified to state lawmakers that this direct-sales model jeopardizes the jobs of his 150 employees.

Established automakers like Honda are also looking into online reservations for EVs, with CEO Shugo Yamaguchi describing the process as “a breeze.”

SA’s Shrinking Premium Dealerships

Volvo EX90 Sand Dune Exterior
  • BMW has reduced its South African dealerships from 55 in 2015 to 46 by 2024.
  • Volvo aims to cut its network from 19 to only 7, citing the challenges of electrification and digitalization.
  • Audi has attributed its restructuring to economic factors such as high inflation, interest rates, and currency depreciation.
  • Recent analyses indicate that German luxury cars (BMW, Audi, Mercedes-Benz) are becoming less available in smaller South African towns, excluding mining areas with higher income levels.
  • Verification through BMW South Africa’s dealer locator and Mercedes-Benz SA’s network map confirms a decline in rural dealerships, with most now concentrated in major urban centers and mining towns like Rustenburg and Emalahleni.
  • In 2014, Mercedes-Benz achieved impressive sales in South Africa, moving 28,993 units. However, this number plummeted by 82% by 2024, with only 5,048 units sold. Audi faced a similar decline of 70%, while combined sales for BMW and Mini dropped by 50% during the same timeframe.

Will South Africans Embrace Online Car Purchases?

Globally, online auto sales are flourishing:

Yet, hurdles remain.

Dealers benefit from franchise regulations in various markets, and a segment of consumers still favors test drives.

Nevertheless, with 95% of car buyers conducting their research online, brands may need to adapt to remain competitive.

The Future: Virtual Showrooms & Emerging Chinese Competitors

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As Chinese brands like Haval and Chery extend their reach into smaller South African towns, premium manufacturers might leverage online sales to cut costs and boost their competitive positioning.

Physical dealerships may soon focus on pre-owned vehicles and Chinese brands, while new premium models are likely to be offered through virtual showrooms and delivered directly to consumers.

What about the mass-market competitors?

VW, Ford, and Toyota lead sales in South Africa but heavily depend on dealership networks. If premium brands successfully shift to online sales, could mass-market competitors follow suit?

One thing is certain: The way South Africans buy cars is rapidly changing.

*This article was first published in our sister publication techfinancials.co.za