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The winds of change are upon the motor industry

There are changes on the automotive industry’s horizon - and these will affect every single South African seeking to buy, repair or service a car.

The changes – effective July 1 – are coming about thanks to guidelines published by the Competition Commission.

According to  George Mienie,  CEO of  AutoTrader, the guidelines are about to introduce substantial changes to the car buying and servicing processes. “These changes will mean that original equipment manufacturers (OEMs), dealerships and workshops will have to alter the way that they do business in the future,” he pointed out.

So, what are these changes and how will they impact the OEMs, dealerships, workshops and – most importantly – the consumer?
Here are some of the most important guidelines – and their implications.

Freedom of choice

Consumers who do not have insurance cover may repair their motor vehicles at a service provider of their choice at any point during the motor vehicle’s lifespan. They do not have to go to a so-called “approved motor body repairer” anymore.

More options

For various reasons, consumers’ options when it comes to motor body repairers have been limited. This will not be the case in future. The OEMs need to promote and/or support the entry of new motor body repairers, with a preference for firms owned by historically disadvantaged individuals. The OEMs also cannot enter into exclusive arrangements, either with one or more approved motor body repairers, for effecting repairs on an OEM’s motor vehicles within a designated geographic area. Practically, this should mean that there are more motor body repairers – and the consumer has more options. In theory, cars should also be repaired faster.

More flexibility with maintenance and service plans

Dealers will not be able to include a maintenance or service plan in the purchase price of a vehicle; the plan has to be “unbundled”. Practically, this means that the consumer can say yea or nay to buying a plan from a dealership. He or she is free to shop for one elsewhere. In addition, if a vehicle with a maintenance or service plan is written off by an insurance company, that plan must pass on to the replacement vehicle.

Dealerships will become less grandiose

The commission said that dealership startup costs – at an average of R60 million – can be exorbitant and a high barrier to entry. In future, the OEMs will need to adopt measures to lower financial barriers to entry and promote the participation of HDIs in the dealership market. In addition, OEMs should not impose so-called “onerous obligations” on prospective dealers.

So, expect a lot more smaller, far less grandiose dealerships to pop up.

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