NEW guidelines relating to the automotive industry will give South African consumers more options when looking to buy, repair or service a car.

The changes – effective 1 July – were recently published by the Competition Commission.

According to George Mienie, CEO of AutoTrader, the guidelines will 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 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 is set to change. 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 cannot enter into exclusive arrangements, either with one or more approved motor body repairer, for effecting repairs on an OEM’s motor vehicles within a designated geographic area.
Practically, this should mean there are more motor body repairers – and the consumer has more options. In theory, cars should also be repaired faster.

More flexibility
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’. This means 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.

Less grandiose

The commission said that dealership startup costs – averaging R60-million – can be exorbitant and a barrier to entry. To counter this, the OEMs will need to adopt measures to lower financial barriers for 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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