Although the final Guidelines for Competition in the South African Automotive Aftermarket, drafted by the Competition Commission to increase consumer choice and participation by smaller companies, comes into operation on 1 July this year, it remains to be seen if the guidelines will make the meaningful difference intended.
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The guidelines are not compulsory and do not form part of any piece of legislation.
- want car manufacturers, known as Original Equipment Manufacturers (OEMs), to acknowledge and not limit consumers’ choice of where to service, maintain and repair their cars, regardless of whether the service provider is an approved dealer or an Independent Service Provider (ISP)
- are aimed at unbundling maintenance and service plans when a car is sold by making it clear what the price of the car is and how much of the price is made up of the cost of the service and maintenance plan. Consumers can then choose if they want to buy the maintenance or service plan to make servicing more affordable and improve competition
- will enable consumers to choose original or non-original spare parts to be fitted by a service provider they choose, who do not have to be an approved dealer, motor-body repairer, or ISP during the in-warranty period
- make provision for OEMs to adopt measures to support and promote market entry for new motor-body repairers, preferably those owned by Historically Disadvantaged Individuals (HDIs).
The guidelines will bring the following possible changes:
- you can have your car serviced wherever you want without losing the warranty
- OEMs and independent third-party providers will have to transfer a service and maintenance plan to a replacement car when the insurer writes it off and if there is no replacement, the consumer must be able to cancel the plan or be refunded for the balance
- consumers will be able to choose original or non-original spare parts to be fitted by a service provider they choose, who do not have to be an approved dealer, motor-body repairer, or ISP during the in-warranty period.
Although this sounds like good news for consumers who complain about the price of car repair and maintenance services, as well as small business who want to get a share of the market, it will likely not be that simple.
Cars are complicated machines that run on computers and it is yet to be seen if manufacturers will share their software due to safety concerns. Without the right software, equipment and specialist instruments, workshops will be unable to service cars properly.
Unless the manufacturer trains the small business workshop technicians, supplies the equipment and audits the workshop, it will likely not accept responsibility. Manufacturers have approved the workshops they have with franchises and the existing workshop owners will complain if new small businesses move in on their territory.
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The car market has so many different kinds of cars with so many models and with technicians being trained overseas, it will be difficult for small business owners to keep up to date with the latest vehicle technology.
There can also be problems when a car is not repaired or maintained properly by a small business workshop when manufacturers will refuse to honour warranties because the car is not serviced according to manufacturers’ specifications. Who will be accountable?
In these difficult economic times, consumers want to save where they can and pay less and cash-strapped consumers will choose to buy a car without the maintenance and service plan. If these consumers have their cars serviced at a small business workshop, the work is only guaranteed for six months according to the Consumer Protection Act.
What if the small business goes bankrupt? Consumers will not have much recourse in this case.
The Automotive Business Council, naamsa, has confirmed that it will support the guidelines. “Our commitment towards transformation is well-documented. It is not our intention to act, work or behave in any way that is contradictory to the country’s ambitions on growth, economic development, employment creation and poverty eradication”, said Mikel Mabasa, CEO of naamsa.
He says naamsa has embraced the guidelines as one of many interventions necessary to accelerate transformation ambitions as adopted in the SA Automotive Masterplan 2035.
“naamsa notes with serious concern some of the misinformation and inaccurate narrative peddled by irresponsible individuals and groups who would like consumers to believe that the guidelines are designed to completely overhaul the entire aftermarket ecosystem and that Independent Service Providers will be a solution to bringing down the price of new vehicles in South Africa through the unbundling of value added services.”
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