Only a handful of countries in the African continent have a steady automobile market. The reasons are mostly economic. Road connectivity, income stability, affordability, and availability of financing facilities are some of the important requirements for growth in automobile demand.
The slow pace of industrialization has been a major cause of concern and it still remains one for many less-developed regions in Africa. However, the continent’s overall economic outlook remains positive in the near future. Marked by an increase in economic and business activities, expanding middle-class, urbanization, and rise of average income levels, the motorization rate is expected to increase in many African countries.
South Africa leads the automobile market in Sub-Saharan Africa. The country accounts for 75% of the continent’s auto exports to almost 150 countries. South Africa houses production facilities for auto brands like BMW, Mercedes-Benz, Ford, Toyota, Volkswagen, Isuzu, Nissan, and Mahindra. And yet, the motorization rate in Africa is well below the global average.
Another interesting feature of the African auto industry is its used-car market. Its market size is big enough to disturb the domestic demand for new cars. There are also environmental concerns associated with older, more polluting vehicles.
All these factors make Africa a challenging but interesting market. Some businessmen/entrepreneurs may see it as not ready yet; others may sense possibilities for starting a business early with the right vision, strategies, and operational planning. While external factors are not within the control of businessmen they need to ensure that they are doing everything right internally as a business entity right from identifying the market prospects to setting up and running a franchise auto dealership business. In order to do so, they may take assistance from the Automotive Business Consulting Services, who may help to lead the business in the proper direction.
Challenges faced by automobile and auto accessories retailers
Initiating the franchising
Retail franchisees run the exclusive showrooms or stores after they are granted the dealership rights by the respective automobile and auto accessories companies or their master franchisors. The entire process of initiating the franchise could be new to many businessmen and entrepreneurs. Business experts at YRC provide Automotive Industry Consulting and Strategy services to business owners to initiate the franchise.
Getting the financial part right
Franchising with a global auto brand may sound exciting but mere association with a big brand is not a guarantee of success in it. Like any other business, franchisees also need to carry out a comprehensive financial foresight and planning towards ensuring that the business is commercially feasible and profitable for them in practically expected ways.
Containing the operational costs
When you take a franchise and run a branded auto store or showroom, you will have to maintain a plethora of standards. These operational standards and processes are defined and provided by the franchisors. Franchisees cannot miss on them irrespective of any operational difficulties on their part even if it means spending extra from their pockets. So, operational efficiency is something franchisees need to hold close to their chests if they are to keep their operational costs under check.
CX Localization
What customer experiences in their journey varies from place to place and from time to time. An automobile brand from the U.S. may not know what customers in your city expect from a car dealer. That is where the need arises for the franchisees to localize their CX outlook to be able to better understand and address the needs and expectations of their local customer base. Unfortunately, for most of the car dealerships, their CX strategies lack any effective consideration for localization. Automotive Industry Consulting and Strategy are necessary to make the most appropriate CX strategy for the automobile business.
Following the SOPs
Generally, the SOPs are provided by auto companies or their master franchisors. However, sometimes due to the ground realities and practical scenarios, it becomes difficult for the franchisees to follow the procedures in toto or the given SOPs may not be enough. It can lead to affected operations, customer dissatisfaction, and friction between the franchisor and franchisee.
Managing human resources
Meeting the staff-oriented expectations set by auto brands or their master franchisors can be a tough ask at the implementation level. Franchisees have to face many challenges in finding the right recruits, dealing with attrition, managing payroll and benefits, compliance with local labour laws, etc. To reduce the burden, many auto dealership enterprises seek the assistance of Automotive Business Consulting Services who help them streamline their HR operations.
How YRC can help: a glimpse
YRC (Your Retail Coach) offers Automotive Industry Consulting and Strategy services towards helping franchisee retailers establish a robust enterprise. YRC helps in preparing business plan, strategy formulation, operational planning, and many other key areas of business management. Here’s more on what we do through our automobile & accessories industry consulting services for Africa.
How will you distinguish your car dealership from that of a competitor’s who has a dealership from the same automobile company? With homogeneity of products and services, how will you stand out as the best from the rest? YRC will help you identify and establish your unique standing in the market. We will also help you craft the network of the value chain and internal capabilities required to deliver this UVP. To understand it you may take assistance from Automotive Business Consulting Services of YRC.
Is your business going to be profitable in the ways you expect? The auto companies already decide the maximum margin you could extract. They will also tell you what floor area will be required, how much inventory you will have to retain, and other key areas of performances which will have a bearing on your financial resources. So, the financial implications, coming from the franchisor and those emerging from your own role in the franchising, have to be considered in the business plan. YRC will help you with the assessment of your capital and operating expenditure requirements, estimation of sales turnover, assistance in purchase and inventory planning, preparing the profit and loss projections, and ROI and break-even analysis. YRC provides Automotive Industry Consulting and Strategy services to help businesses become profitable and financially prepared.
SOPs provided by franchisors are more like standards they expect franchisees to cover. In reality, franchisees have to build their internal workflows to successfully follow those SOPs. YRC’s automobile & auto accessories business consulting experts will help you build those internal workflows towards ensuring that the defined standards of performance and output set by the franchisor are met, efficiently and effectively. YRC helps to robust the operations of its partners through Automotive Business Consulting Services.
Our team of Automotive Industry Consulting and Strategy experts shall map the entire customer journey touching all the important digital and physical touchpoints, identify the deciding variables, and come up with a robust CX strategy for your business enterprise. This will enable you to formulate informed marketing strategies and digital marketing campaigns.
Given the challenges faced by franchisees in the auto and auto accessories industry to effectively manage their human resources, YRC offers expert assistance in organization design, staff analysis and succession planning, HR SOPs, PMS, and change management.
We are a boutique retail consulting firm. To know more about our services for Africa’s automobile & accessories industry or if you have any query, drop us a message and we shall get back to you.