Supplied
Supplied

Auto industry at crossroads over aftermarket reforms

By Brian Joss Time of article published Mar 17, 2020

Share this article:

There has been mixed reaction to the recent publication of the draft guidelines for the automotive aftermarket sector by the Competition Commission.

Right to Repair South Africa (R2RSA), which has been advocating for consumers to be able to take their new vehicles to independent workshops of their choice without voiding the manufacturer’s warranty, has welcomed the guidelines as a “big win for consumers”. However, the National Association of Automobile Manufacturers of South Africa (Naamsa) is more cautious.

The chief executive of Naamsa, Michael Mabasa, said the association and its members were not substantively opposed to the proposed reforms. “We are concerned that the conditions are not conducive to bluntly introduce the magnitude of the reforms. Many of the independent workshops are not equipped to repair or service new-generation computerised vehicles under warranty,” he said.

“There is a huge skills deficit, because the mechanics are not technicians and do not have the skills to deal with vehicles manufactured today. The commission has not taken this or the tooling shortage into consideration, and, as a result, the safety of vehicles will be hugely compromised.

“We are concerned that these guidelines will encourage car owners to support the fitting of sub-standard parts on their vehicles. This will result in the importation and proliferation of cheap and dangerous components, which will undermine safety on our roads,” Mabasa said.

There are 1853 franchise vehicle dealerships in South Africa, and they employ an average of 45 people per dealership. Many of these employees may lose their jobs. Some dealerships may be forced to close if they cannot reach the targets needed to sustain their operations, Naamsa said.

The deadline for comment on the draft guidelines is March 16.

Said Mabasa: “We are sceptical that the commission will even look at our new submissions after they did a unilateral U-turn during what we thought were constructive conversations around these reforms. It is always difficult to legitimise a process that has been concluded before key stakeholders are even given a fair hearing. We are convinced that these guidelines are in their final version and the commission just wants to tick a box that they have given us a chance to respond. We are consulting with our members to decide if our collective input will still add value or not,” Mabasa said.

Gunther Schmitz, the chairperson of R2RSA, said the draft guidelines were a positive move for the industry and a “big win for consumers”.

“This increased transparency and freedom of choice for consumers will help to grow small business. Lack of access to technical information has constrained the independent aftermarket.

“It is encouraging the commission has acknowledged that access to technical information remains a prerequisite for effective competition in the automotive aftermarket and is removing that obstacle by directing original equipment manufacturers (OEMs) to share key technical information with independent service providers, for both in-warranty and out-of-warranty motor vehicles. We hope the OEMs will remove the barriers not try to make access to technical information unaffordable,” Schmitz said.

R2RSA said another win is the unbundling of maintenance and service plans from the purchase price of the vehicle. “Dealers and finance providers must now give the buyer details of all inclusions and exclusions included in the service and maintenance plans so customers will be able to choose, making available more affordable service options,” Schmitz said.

Cost savings

The Motor Industry Workshop Association (Miwa), which represents more than 2500 accredited establishments, from general repair to fitment centres, said the draft guidelines will, if implemented, open up the market and result in meaningful cost savings for consumers, without compromising on quality and service.

Ten years ago, Miwa initiated the R2R campaign after gaining first-hand knowledge from their European and North American counterparts. Miwa approached the major vehicle manufacturers, but their muted responses resulted in the creation of R2RSA, a non-profit company to “lobby for an environment where consumers can select where their vehicles are serviced, maintained and repaired during the currency of manufacturers’ warranties, at competitive prices and in the workshop of their choice, and one which gives aftermarket small medium enterprises a chance to stay in business. The Competition Commission should be commended on following the international R2R trend,” said Miwa chairperson Dewald Ranft.

Miwa has been “upskilling” its workshops and has implemented stringent grading and accreditation guidelines, which comply with industry-set criteria and standards. “We are confident our industry can deliver the high standard of repair required,” Ranft said.

Richard Green, the national director of the South African Motor Body Repairers’ Industry (Sambra), said the guidelines would eliminate anti-competitive behaviour.

“It will broaden the pool of repairers significantly which will give consumers a much wider choice of approved accredited repairers. As a sector we reject any bias and have always opposed any form of unfair business practice,” said Green.

The implications for parts suppliers are positive, as the cost of premium vehicle parts is not sustainable, and alternative parts manufacturers, which are able, in many cases, to produce parts matching the specifications and quality of premium parts, have already made significant inroads into the genuine parts market, Sambra said.

Naamsa said manufacturers will continue to invest as long as the climate is conducive for them to do so. It said it has put a master plan in place to transform the automotive industry.

“Our ambition is to grow the automotive industry through the acceleration of employment of black South Africans, upskilling of black employees, empowerment of dealerships and authorised repair facilities, and substantially increasing the contribution of black-owned automotive component manufacturers within the automotive supply chain.

“The establishment of the R6 billion Automotive Transformation Fund (AITF) is already under way to drive black industrialist participation in the industry. Automotive Masterplan 2035 is a blueprint for many other sectors who have followed in our footsteps in developing their own sectoral master plans as confirmed by President Cyril Ramaphosa during his State of the Nation Address,” Mabasa said.

“The AITF seeks to address the very same reforms that the Competition Commission is forcefully imposing on us.”

MOTOR INDUSTRY DRAFT GUIDELINES

The competition Commission’s draft guidelines state:

* Car owners will no longer be forced to use the warranty, service and maintenance plans offered by vehicle manufacturers. They will be able to go to independent workshops without voiding their warranties.

* Carmakers and franchised dealers must allow customers to fit non-original parts when a specific part’s warranty has expired, without voiding the balance of the warranty. These parts will offer the same standards of safety and quality as original parts, but at a lower cost.

* Original equipment manufacturers (OEMs) must make available to independent workshops technical information relating to its motor vehicles, on the same terms offered to its approved service providers. However, this excludes information about security systems.

* OEMs and dealers must provide training to employees of independent workshops who request parts- or product-specific training, at a reasonable cost that may not exceed that recommended by the commission. The training must include the methods used to effect motor body and mechanical repair, service and maintenance and fitment works.

PERSONAL FINANCE 

Share this article: