Frequently asked questions


Open a used and or new motor vehicle dealership

Question: What do I need to do to open a used motor vehicle dealership?

Answer: The following is a broad outline of what you need to do:

  1. Identify the property you wish to operate from;
  2. Check with the local municipality that the property is properly zoned for the type of business you are going to conduct. In addition, ensure that your premises complies with the necessary fire, safety and health standards / regulations;
  3. You will have to decide: are you going to operate as a sole proprietor or are you going to register a partnership, company, etc.
  4. Once you have completed the aforementioned you will have to approach your local SAPS station to register as a trader in second-hand goods in terms of the Second-hand Goods Act. If you do not do this you will be trading illegally;
  5. If you intend employing staff, then you will be required to register with the Motor Industry Bargaining Council and comply with requirements of the Main Agreement for the Motor Industry, which sets out the minimum employment conditions and wages applicable in the industry;
  6. It would be advisable to register with the local motor vehicle licensing authority as a motor vehicle dealer, as all vehicles you purchase will need to be dealer stock, prior to you being able to display them for sale;
  7. It would be in your interest to register with SARS in terms of VAT so that you can claim national input tax credit on the vehicles you purchase. Also obtain from SARS the motor vehicle dealers’ VAT guide which is up dated on a regular basis; and
  8. Finally, you can join the RMI / NADA who as part of your membership will give you guidance and assistance in all of the aforementioned areas.

Question: How can I acquire a new motor vehicle dealership?

Answer: If you are interested in acquiring a new motor vehicle dealership, you have a number of options:

  1. Find a dealer who is looking for someone to invest in his /her dealership. This will be subject to the relevant manufacturer / importer’s approval;
  2. Find a dealer who is in the market to sell his / her dealership. This will be subject to the relevant manufacturer / importer’s approval; and
  3. Approach the dealer development department of the motor manufacturer / importer whose brand you are interested in acquiring, to see if they have any opportunities.

What are the Benefits of Transacting with Franchised Motor Vehicle Dealers?

New passenger and commercial motor vehicles are sold through franchised motor vehicle dealerships and this form of business model has pro-competitive benefits for all role players in the value chain and, in particular the motoring consumers and the local communities in which dealerships operate.

Motor vehicles are highly regulated products that require licensing, insurance, financing and periodic servicing and maintenance. Motor vehicles must also meet numerous stringent local and international environmental and safety standards.

Various laws and regulations govern the sale, financing and servicing of motor vehicles, which is usually carried out via a network of approved franchised new passenger and commercial motor vehicles dealerships. These consumer, financial and franchise laws not only protect consumers, but also govern the relationship between dealerships and manufacturers.

How Do Consumers Benefit

Consumers benefit from the franchised dealership business model first and foremost because dealerships of the same brand compete for the same customer’s business. Therefore, customers can be assured of getting the best possible deal and service. This also applies where dealerships from different brands compete for the very same customer’s business.

Franchise dealers compete on the servicing and maintenance of motor vehicles, as consumers have the right to take their motor vehicles to any dealership of their choice. It is the dealership that offers the best service that will retain the customer.

Dealers are required to employ qualified technicians, who attend regular training at the manufacturer to ensure that they are fully abreast with the latest technology incorporated into the vehicles, thereby providing consumers with access to quality and professional work, and ultimate peace of mind that their vehicle is well taken care of.

When a manufacturer needs to undertake a product recall to replace a defective part, this is done via the franchise dealership network, at no cost to the consumer.

When a motor vehicle is still under the manufacturer’s warranty and a defective part needs to be replaced, the authorisation, replacement and / or repair thereof is done via the franchised dealership. Invariably these warranty repairs are done at no cost to the customer.

Dealers also assist consumers in applying for the financing of the motor vehicle being purchased. Dealers have direct access to the various motor vehicle financing institutions and are in a strong position to provide the customer with comparative quotations, saving the customer time in having to personally contact the various financial institutions themselves.

How Local Communities Benefit

Dealerships are the economic cornerstone of many communities. When other businesses move in and out of communities, it is the dealership that remains, offering well-paying jobs with opportunities for advancement.

More than 1 700 franchise motor vehicle dealerships operate across South Africa. These businesses employ in excess of 56 000 employees. Additional jobs are also created in sectors that provide service and conduct business with motor vehicle dealerships. These jobs are critical in addressing unemployment as well as providing tax revenue which ultimately benefits local communities.

What are the Benefits of being a member?

  • Promote the interests of franchised dealers to manufacturers, importers, Government, other industry trade organisation and consumers
  • Provide advice and assistance to dealers on both trade and labour related matters
  • Liaise with manufacturers, Government, suppliers and service providers on behalf of their members
  • Hold regular meetings with Government departments including the Department of Transport, Department of Trade and Industry, National Treasury, South African Revenue Services, Merseta amongst others
  • Provide industry statistical information and related data reports and analysis, including the annual NADA Dealer Satisfaction Survey
  • Developing relationships with Dealer Councils in support of dealer interests
  • Hold regular meetings with members to provide industry insight and networking opportunities. This includes regional dealer meetings and work on initiatives that help promote franchised dealers to the consumer
  • Provide regular updates to members on motor industry news, legislative and regulatory changes, Government consultations, enquiries and market data