File picture: Newspress.
Pretoria - Franchised car dealers are up in arms about the possible impact of a new draft voluntary code for the industry compiled by the Competition Commission, claiming it would hit the franchise dealers industry to the benefit of independent dealers.

Mark Dommisse, the national chairperson of the National Automobile Dealers' Association (Nada), said on Thursday that if there was any attempt to make the code compulsory, Nada would definitely challenge it in court.

Gary McCraw, the director of Nada, said Nada had requested that industry help to draw up the code, but the commission decided to draft the code.

McCraw said there were consultations with industry about the code, including written submissions and face-to-face engagements, but the submissions and comments by the industry had been “flatly ignored”.

“Nada accepts and agrees with each of the fundamental principles in the code, but the actual operational side of the code is unworkable,” he said.

Dommisse said there were about 1600 new car franchised dealers in South Africa, whose investments in dealerships totalled about R48 billion and directly employed 60 000 people.

He said the code as currently issued would allow independent dealers or anyone else to service and maintain vehicles, including new cars within the warranty period.

Dommisse said that if the code was issued in its current form it would create a massive viability issue for new car dealer franchises, because their workshops and parts supply would halve, resulting in job losses he doubted would be taken up within the independent dealer sector.

He said the franchised vehicle dealers serviced the about 2  million new car market within the warranty period, which accounted for 20 percent of the 10-year car parc of about 12 million vehicles. “We believe the focus of government should be on the other 80 percent of vehicles,” he said.

Impressively sustainable

Director General of Trade and Industry Lionel October, said the motor industry is “a South African success story” as it provides substantial benefits to the country, while its impact on the overall economy and employment is substantial and far-reaching. 

Dommisse added: “A loss of just one of the seven major manufacturers to South Africa would have unprecedented spill over effects both financially and socially that would far outweigh the current subsidies that manufacturers are receiving,” says Dommisse.

“We should also keep in mind that Australia shut down an entire motor manufacturing industry due to adopting controversial codes.”

Business Report