Used car parts industry faces ban
An amendment to the National Road Traffic Management Act that could ban the sale of used car parts, has angered the industry, which predicts the law will force thousands of businesses to close down.
The insurance industry plans to challenge proposed legislation forbidding trade in car parts from scrapped vehicles.
“We shall probably debate the issue at our next board meeting on July 1 to determine what we can do to oppose this bill,” Dawie Buys, motor manager at the South African Insurance Associations said.
Buys doubted that the government’s idea would put the brakes on chop shops and vehicle crime. Rather, its negative ripple effects could be felt from the insurance industry to motorists, affecting spare part dealers and workshops as well, he said.
“If 35 percent of the value of a vehicle is recovered when it is bought as scrap (to salvage parts), that percentage will come down and there will be a ripple effect on business, on the insurance industry,” he said.
“It is normal practice for us to sell (scrapped vehicles) to salvage contractors that salvage the good parts.”
MORE EXPENSIVE INSURANCE
Buys also said the ban would lead to people not being able to afford vehicle insurance as they would battle to source economic quotes for car parts. “Not to mention the jobs that would be lost.”
According to reports, the Department of Transport wants this and other amendments to be enacted by December.
Many used car parts businesses contacted by the Saturday Star this week, were clueless about the amendments.
The banning of the sale of used car parts is just one of several amendments to the act. The other amendments include requiring cars older than 10 years to be tested for roadworthiness every two years, from the end of this year, and regulating driving instructors.
This, said chief director for road regulation, John Motsatsing, is intended to ensure the fitness of drivers and vehicles. The amendments have been widely criticised by businesses, salvage companies, insurance companies and the DA who said the details and wording of the amendments were worrying.
Donald Kau, spokesman for Santam, said the proposed amendment could have a massive negative impact on the wider automotive industry and will potentially weigh heavily on some insurance clients.
WHAT ABOUT OLDER CARS?
“Most worrying there is the potential that premiums will have to be reviewed on older model cars and there may be implications for insurers taking these vehicles onto their books.
“In other words, many clients who need insurance most, given that 65 percent of the cars on our roads are currently uninsured, could find themselves unable to afford premiums, and insurers may be reluctant to take on the risk of insuring older vehicles because covering them could become uneconomical.”
Kau said while the use of second-hand parts in automotive repairs represents a small percentage of parts needed, the insurance sector uses this market to contain costs for repairs to older models, particularly where parts are hard to obtain, are unavailable, or expensive. The Santam group, including MiWay, recovers in excess of R600 million from salvage.
A Joburg used car parts shop owner, who did not want to be named, expressed shock and anguish when the Saturday Star called him this week.
“What you are you talking about? Are you serious?” he asked. “That would be a disaster for me and my business – in fact, for the whole industry. It means every one of our businesses will close – unless we operate under the radar. We earn an honest living. The government will force us to sell the parts illegally.”
The owner of Looking for Spares, who only gave his name as J Ramsey, criticised the government’s stance that the amendments would improve road safety. He said the problem was that the law does not prohibit the flow of accident-damaged vehicles.
“Hopefully a law will be passed to stop ‘bad rebuilds’ from being put back into use on the scale that we are experiencing, which in turn will free up the good vehicle spares that the industry is so short of as scrap yards cannot get enough stock.
“The people of South Africa need good reliable spares to help the economy grow and impeding access to good used spares is not an option for the middle-class people who have now not only to cope with e-tolling but also rising living expenses,” he said. -Saturday Star