New automotive industry guidelines open a promising road for independent service providers
THE vice-like hold that the big players in South Africa’s automotive industry after-market previously held will be loosened from July 1.
That’s when the Competition Competition’s “guidelines for the automotive after-market” is due to kick into gear.
It was aimed at eradicating anti-competitive tendencies, transforming the industry and enabling greater inclusivity of historically disadvantaged individuals (HDIs) into the marketplace.
Previously, independent service providers (ISPs) were not permitted to service, maintain or repair cars because original equipment manufacturers (OEMs) slapped on certain warranty stipulations that gave dealerships the inside track to the sale of parts, service and repairs on vehicles.
Insurance companies, in addition, had their own list of preferred service providers to do repair work.
George Mienie, chief executive at AutoTrader, said the guidelines were about to introduce substantial changes to the car buying and servicing processes. “These changes will mean that OEMs, dealerships and workshops will have to alter the way that they do business,” Mienie said.
Siyabulela Makunga, the commission’s spokesperson said the guidelines would pave an easier way for small medium enterprises (SMEs) and HDIs to become authorised dealers in the industry.
After receiving numerous complaints from various ISPs and members of the public about alleged anti-competitive practices, Makunga said they began to draft their guidelines.
The final draft was released in December and gazetted last month.
“The final guidelines are the result of years of engagement and negotiation to obtain the best balance for all stakeholders while addressing all concerns raised.”
Makunga assured that the commission would pursue cases against OEMs, insurers and other parties who failed to adhere to the guidelines.
“We may also conduct periodic assessments in the sector to monitor compliance by the affected parties to the guidelines,” Makunga said.
He said the guidelines advocated for the highest levels of service delivery from all the respective role-players.
“ISPs should have relevant business insurance cover; OEMs should provide access to technical information about the vehicle to ISPs to enable them to effectively conduct repairs; OEMs should also provide ISPs access to their training.
ISPs must make disclosures about risks consumers face with regards to potentially rendering void certain obligations of the warranty, should there be damage arising from ISP repairs or damages arising from the use of non-original spare parts.
Consumers would be responsible for ensuring that work done on their vehicles was adequately recorded by the relevant repairer,” he said.
Les McMaster, a director with Right to Repair South Africa, a not for profit organisation championing for fair competition in the automotive repair supply chain, said they played a pioneering role in the emergence of the guidelines.
Their membership largely comprised those active in the automotive after-market.
McMaster said their activism for fair trade began in 2009. After years of investigations, and partnering with other like-minded bodies, they approached the commission with their evidence.
“The commission could see there were serious breaches, especially exclusivity and anti-competitive behaviour, in the system and this made our case stronger.”
He said ISP workshops started to receive star ratings since 2012, and they have encouraged members to jack-up their competency levels.
He believed the consumers would ultimately be the biggest winners.
“A consumer can now buy his car for around R80 000 cheaper because he is not compelled to purchase a service plan from the dealership. On smaller cars the savings be would be about R40 000,” said McMaster.
Previously, the National Association of Automobile Manufacturers of South Africa (Naamsa) were not opposed to the reforms, but believed the commission created a hype that ISPs were ready for new work.
Naamsa said, they were not completely equipped with the necessary skills and tools. Therefore, white-owned businesses would benefit the most because of their state of readiness.
Mikel Mabasa, Naamsa’s chief executive said they planned to issue a statement on the latest developments, soon.
Mzo Witbooi, spokesperson for Toyota South Africa said: “In principle, we support the guidelines as we believe it is a necessary intervention to commit to an appropriate redress in the industry.
Therefore, we support the initiative and have – in fact – proactively set up a number of strategic plans in place to address transformation in the industry.
David Brunskill, owner of Morningside, Durban ISP, said he looked forward to the changes.
“It is going to be amazing.”
Brunskill said he possessed diagnostic equipment and tools to work on any car in the world and his operation could do much more than an agent's computer.
But he was mindful that some ISPs might not yet be ready to do a better job than dealerships.
He said rates charged by ISPs were far cheaper than the big workshops.
“It is like a robbery.”
Brunskil said another selling point was that he gave his customers personalised attention, which they appreciated.
Viken Singh who runs a repair shop from his home in Kharwastan, Chatsworth, has already upgraded his machinery anticipating the new guidelines.
Singh said he would make changes according to how business increased.
He said it was up to fellow ISPs to use the opportunity and not mess it up by cutting corners as it would be to their detriment.