The vehicle retailer McCarthy Motor Holdings South Africa is closing down four of its 130 national dealerships.
The company, which sells 30 of the 50 vehicle brands available in the country, said low sentiment in the market was forcing it to make the tough decision to shut down the dealership, which had become unprofitable.
McCarthy's chief executive, Brand Pretorius, said yesterday the process of closing down the four dealerships would be completed by the end of February, adding that the future of other loss-making dealerships was unclear at the moment.
He said: "Unfortunately we have had to take the last- resort decision to reduce expenses, and we are very sensitive to protecting employment and we are talking to unions about the decision. We have had four years of significant growth and we have now entered a period of consolidation.
"South Africa has entered a buyers market never seen before. With 50 brands and 2000 individual models available in the market, there is intense competition and in some cases there are high levels of inventory."
Pretorius said McCarthy was taking special steps to protect its dealer network, including increased marketing, especially for its fleet-vehicle market and in customer-retention initiatives.
In May the company would be introducing affordable cars from Chinese manufacturer Chery.
"We cannot afford to lose any customers in these tough times. Enhanced affordability is the key that will unlock sales growth. The imported [Chery] cars will be sold at very compe-titive prices from what is available in the motor vehicle sales market.
"Adverts offering interest rates lower than the unchanged 14,5percent prime and longer terms of service plans are a sign of a struggling motor industry with a lot of stock to sell," said Pretorius.
He said although new vehicles were most affected by affordability, the fleet-vehicle market and upper-market-vehicle sales remained strong.
"There is a definite buying down trend, but the SUV market remains robust. The up-market customer still has more funds."