Bid Auto

Sustainable development at McCarthy (BidAuto)

In the economic downturn, McCarthy has aligned its business with changing market conditions and focused on cost containment. Despite these business challenges, McCarthy continues its long-term strategy of leading with value, earning the trust of all stakeholders and building excellence in its workforce.

Material sustainable development issues

• retaining customer loyalty through responsible business practices
• effect of the economic downturn and legislation on business turnover and practices
• difficulty in attracting and retaining HDIs at senior level
• talent availability, attraction and retention
• the impact of increasing fuel prices, stricter emission standards and the green tax on
  sales in certain vehicle categories
• imperative to grow the value segment of the vehicle market
• management of HIV/Aids in the workplace
• impact of crime on dealerships and car rental

Sustainability

The downturn across the economy has hit the motor industry particularly hard, forcing McCarthy to reduce its cost structure significantly, a strategy that necessarily places strain on the company’s social and environmental activities. However, the company’s deeply entrenched values – mutual trust and respect; ethical dealings; openness and sincerity; teamwork and excellence in putting the customer first – have consistently been aligned to the sustainability agenda, thus keeping the company on track, despite current business challenges.

Managing business contraction and our workforce

Recession severely affected our staff. Unsurprisingly, job security and concern over personal finances have been the most pressing issues facing our people. With the closure of 28 branches in the dealership network (from 140 to 128), McCarthy’s headcount fell by 15%, from 7 600 to 6 752, and every effort made to contain costs. In this climate, leadership visibility, transparent engagement and communication are vital to restore employee morale and commitment to the business. The CE and his executive team visited branches across the country, holding briefings and convening discussion groups to provide staff with ongoing information and perspectives on the economic realities being played out in the marketplace. These initiatives were in addition to engagement through our network of national, regional and business unit forums. All forum chairmen and representatives have been trained on EE compliance and good practice.

About 420 employees were affected by retrenchments following business closures. About 125 of these were cross-skilled for deployment in new dealerships such as the McCarthy Value Centre and at other business units. South Africa’s Labour Relations Act guides the treatment of employees in these situations, and McCarthy has a strong team to assist with relocations and retrenchments. Our Careers at McCarthy programme processes thousands of CVs with emphasis on employment equity. This initiative has been responsible for a significant percentage of internal recruitment. During restructuring, the company strives to minimise social impacts. There was no industrial action during the process, indicating that our approach was appreciated by our workers.

Every year, we measure the alignment between our values and our behaviour. Despite restructuring and retrenchments, our employee satisfaction survey showed a slight improvement over last year. A satisfaction level of 73% was recorded from an 83% response; a consequence, we believe, of open engagement and our determination to live company values.

Engaging our customers

In challenging trading conditions, retaining the loyalty of our customers is top priority. Four years ago, McCarthy established its own customer satisfaction index for both new and used-vehicle owners. This index is integrated into the company’s performance management system and affects employee remuneration. Index scores have risen over the years by 10% and consistently top 85% in the case of used-vehicle customers.

We support the short-term insurance industry ombudsman and the ombudsman for the automotive industry, where our interaction is at CEO level. We also subscribe to Hellopeter.com (a webportal for customer complaints). These channels help us identify areas for improvement and provide marketplace feedback.

The National Credit Act continues to ensure that potential customers for our vehicles have sufficient financial means. This year, the Consumer Protection Act was signed into law and comes into full effect during 2010. A key impact of this legislation is to increase our industry’s transactional costs as consumers will have the right to reject a car within a defined period after purchase. In response, we will be conducting workshops across our dealerships to ensure the Act’s provisions are met in full.

All our dealings, particularly those relating to the sale of vehicles, comply with all regulations and we are confident from the feedback we receive that McCarthy conducts its business according to both the spirit and letter of the law. 

Affordable transport

The green tax that comes into effect from 1 March 2010 will add to the cost of high-end vehicles. However, South Africa’s automotive industry has to take into account limited affordability as well as the carbon footprint cost of transport. McCarthy plans to lead the industry by offering energy-efficient and affordable solutions for the green tax era. As part of this strategy, we launched two Chinese vehicle brands into our market, Chery and Foton. The Chery is a light, affordable passenger car aimed at entry-level buyers, while the Foton is a commercial vehicle that conforms to the requirements of the taxi recapitalisation programme and is ideally suited to our taxi market. Total cost of ownership for both vehicles is very competitive. In addition, McCarthy will explore new technologies as soon as commercially viable options become available.

Black economic empowerment (BEE)

Development of historically disadvantaged individuals to positions of real responsibility remains a challenge, as does the integration of diverse cultures within McCarthy. About 60% of staff have attended Performance Through Diversity workshops and 386 participants, including exco and senior management, have completed the Vuka diversity immersion programme. A number of black managerial candidates serve as understudies to established managers while the majority of executive directors at Bid Auto act as mentors to emerging black talent.

Following a Department of Labour review, the 2009 EE plan was successfully submitted.  EE progress on 2007 was confirmed as middle management representation rose to 25% against the target of 20%. Senior management penetration rose from 2% to 4% while the target level of 14% was maintained across top management.

While spend on technical and non-technical training fell from R19,2 million to R14,1 million in line with our reduced staff complement, training investment per employee was maintained. Stars of Africa (a NUMSA partnership) continues its training of informal mechanics in the Orange Farm community. The intention is to help these contributors to the informal economy make a living while increasing awareness of the safety-critical items that need attention before old vehicles are put back on the road.

Enterprise development achieved a milestone with the launch of 21 parts delivery vehicles, owned by former employees. A consultancy firm specialising in this challenging field is managing the early growth pains. This project is the key element in our enterprise development programme.

A McCarthy enterprise development department has been established to grow opportunities for emerging black businesses. Our ED strategy encourages franchise-driven initiatives, thereby qualifying for optimum incentives while assisting ED beneficiaries at local level. Targets have been set and measurement indicators are in place.

Our biggest preferential procurement challenge is that 98% of McCarthy’s spend is with original equipment manufacturers. This year, we nonetheless received compliance certificates from a further five, bringing to eight the total number of OEM registrations (last year there were only BMW SA, Mercedes Benz SA and Nissan SA). As more of our suppliers become registered, so we improve our understanding of our supplier profile. This year, our spend with BBBEE-compliant suppliers increased to 15% of total spend.

HIV/Aids awareness and prevention campaigns are run every September during our Wellness Week programme. In response to difficult economic times, we expanded the Wellness Week effort to assist employees suffering from stress-related conditions.  

Our CSI spend increased by 8% to R4,3 million as we made up for partners who were unable to maintain their financial support for our flagship programme, Rally to Read. Staff members also participated and became motivated following the ”Maintaining the momentum” mini-Rally to Read events in March 2009. As a result, the required R5 million budget was met. Our CSI focus is on early childhood development and education through the establishment of computer centres at schools and through our bursary programme at tertiary institutions.

McCarthy automotive artisan academies

McCarthy automotive artisan academies remain the leading automotive industry training provider and are our major contribution to the effort to overcome the skills shortage in our sector. McCarthy participates on SAQA and SETA forums, helping to raise the standards of automotive training while registering new automotive and maintenance qualifications from level NQF2 to NQF5 (290 of our learners achieved NQF certification). McCarthy participated in the Department of Labour’s new accelerated artisan training programme, engaging 52 trainees.

We now provide comprehensive career paths for all McCarthy service department employees (new entrants as well as current artisans are welcome) offering eight learnership qualifications in the areas of mechanical maintenance and automotive electronics diagnostics and repair (autotronics). Specialised equipment training and product training courses are also offered for Mahindra, Foton, Meiya, Gaz and Chery. Laboratories are installed at our Cape Town and Pinetown campuses.

Our automotive artisan academies delivered 16 000 training days; 10 600 internally, the balance to external customers. Black students accounted for 75% of total students trained.