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New automotive code set to shake up the sector

Freedom of choice for motorists, a fairer trading environment for after-market suppliers and service providers, and a job-creation boost for the economy.

The Competition Commission’s proposed new code of conduct for the South African automotive industry is set to usher in groundbreaking changes for car owners, automotive aftermarket businesses, and the economy as a whole. The draft was published in September 2017, with a final round of feedback and submissions received on September 11, 2018.

The proposed code will give car owners the right to repair or service their vehicles at a provider of their own choice, without voiding their warranties.

At present, South African car owners are typically locked into using a vehicle manufacturer’s service centres and parts departments because of the embedded motor or service plans. 

This is very different from the rest of the world. In countries such as the US, car owners can buy a motor or service plan separately from their car, giving them greater choice.

Organisations such as Section 21 company Right to Repair South Africa (R2RSA) – which was founded by the Motor Industry Workshop Association (Miwa) and represents 2 500 independent workshops, automotive aftermarket distributors and parts manufacturers – want car owners in this country to have the same level of choice.

South Africa’s Competition Commission has already come a long way towards responding to this call. Its latest draft of the proposed new codes seeks to address competition constraints in the automotive aftermarket industry by, for example, ensuring that: “independent service providers can undertake in-warranty service and maintenance work and in-warranty motor-body repairs”.

The code also seeks to widen “the pool of approved service providers who can undertake in-warranty service and maintenance work, in-warranty mechanical repairs, and in-warranty motor-body repairs.”

A key element of the code is that there should be “no unfair restrictions on the sale or distribution of original spare parts; allowing greater consumer choice in choosing suitable spare parts for repairs and maintenance of their motor vehicles”.

Transformational element

The code will be unique in a global sense in that it has a strong transformational element pushing for historically disadvantaged individuals to own more dealerships and other businesses in the local automotive sector.

Original equipment manufacturers (OEMs) will have to promote the entry of historically disadvantaged individuals into their networks of service by, for example, subsidising capital, and providing facilities, tools, equipment, and training.

While the code will be voluntary, the likes of R2RSA will monitor and flag any transgressors.

Overall, the proposals are expected to create a more level playing field in the aftermarket sector and provide a much-needed boost for the 8 000 independent workshops in South Africa, which employ thousands of South Africans.

History has shown that when big monopolies dominate economies, they don’t create jobs. South Africa, the most unequal country on earth according to the World Bank, is experiencing this first-hand. Entrenched monopolies are a feature in several sectors, and the unemployment rate stands at 27.2%.

If we want an economy that is creating jobs, we must support small to medium enterprises (SMEs), such as the thousands of independent workshops scattered across the country.

Studies by the International Finance Corporation show that SMEs account for more than half of all formal jobs worldwide.

This is why efforts by R2RSA and the Competition Commission in respect of the right to repair could become an example of how South Africa is able to open up its economy and make it more inclusive.

Filum Ho is vice chair of Right to Repair SA and CEO of Autoboys, SA’s first black-owned national glass and collision parts provider. It is 51% owned by African Rainbow Capital (ARC).

COMMENTS   19

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…to many “skellum’s” in the private motor garages to trust a decent oil change service on a spanking brand new motor, let alone a major service

Even more skelums in the dealer space. How about being charged for sump plug washers when the oil was extracted with a pump via the dip stick housing? and brake fluid flush never undertaken but charged for? never mind the non-existent air con filter that never gets replaced but is charged for … which happened to me on the last service of the service plan of the last vehicle I acquired.

Then there are the rates charged according to the flat rate manual. The motor industry is nothing more than a very well organised mafia. Labour rates are now over R850 p.h for most dealers with some well over R1000 p.h. ON FLAT RATE MANUAL CHARGES.

Find yourself a decent independent mechanic and there are many around. Finding them is not difficult, just look at the vehicles inside the workshop and this will give you a very good indication of their expertise. Nowadays any decent workshop will have diagnostic machines that will work on almost any car.

If you find a well trained old school mechanic hang on to him, they wont be around for much longer.

This will be good for the industry. If you’ve purchased more than one vehicle in your lifetime and had built a strong bond with a reputable mechanic, then you’ll not have any problem in handing over your precious new vehicle to him/her for service. The lock-in warranty never worked for me as I didn’t ever clock the kilometres as required and ended up paying huge bills for basically only a oil change and let’s not forget the ‘necessary’ replacements that ‘must’ be dealt with i.e. wiper blades. It’ll force the dealers re-visit their service charges.

An oil or wiper blade change is still OK, but if your mechanic repairs some intricate parts of your car (gearbox/cylinder head/fuel injection system etc.) under warranty, the OEM will not take responsibility for his work….where does that leave you the consumer? In any event it stands to reason that the OEM will only allow warranty work to be performed by someone trained by themselves – your mechanic may not have the correct training and qualifications…

Dragging the motor industry kicking and screaming into the 21st century. This ought to be good.

Mercedes and those manufacturers are not going to honor their warranty if some backyard mechanic starts fiddling around with the complicated computer systems found in these vehicles. If they have to honor the warranty, they will just cover their risk by loading the cost of the vehicle for the consumer.

I like how this supposedly good piece of legislation was not overlooked in the area of being handy for some transformation gains as well…

There should be an option of a service contract or not, plus a warranty selection, one to three/five years with pricing. That will make the dealerships start thinking out the box. The dealership makes money out of the service contracts, won’t say how…

This is probably the best part of this change – the OEM’s will have to sell the service plan separately (i.e. the consumer may choose) and therefor be transparent about the price thereof!

Shame. Do not buy a Mercedes then.Plenty of better buys around then vastly overpriced MB.

Keeping up with the Joneses

Dumb and irrelevant comment, well done.

“, they will just cover their risk by loading the cost of the vehicle for the consumer.”
They already do this. All of them “insure” for the time the car is most unlikely to break down and do service in that window. Then after that window closes, guess what? YOU the poor sod who bought the car has to fix it yourself.
I loved the story about the motorist taking his car to the wellknown foreshore dealer and stating that its motorplan has expired. As a result the dealer eagerly went ahead and repaired all those things which the customer has been nagging about the whole duration of the motorplan. The charges came to about R40k.
Then the customer said he had just reviewed the plan on his book and discovered that he actually had another month left……dealer caught out.
That’s how it works.

….brilliant!! 🙂 (Hmm…sloppy dealer not checking their records).

Urban legend …

Few issues here, the majority of after market businesses I have encountered are basically thieves who charge you the maximum they can charge you and offer little to no warranty on workmanship.

“The code will be unique in a global sense in that it has a strong transformational element pushing for historically disadvantaged individuals to own more dealerships and other businesses in the local automotive sector.”

Let’s tear down another industry in the name of transformation, please can someone explain what barrier there is to owning a dealership? None as far as I can see.

Lastly, if I was a manufacturer then I would simply cease to offer warranties in SA. The price of the car will come down sure but if your Ford Rangers gear box bangs out in the first few months then you will be mighty angry at this piece of legislation.

Agreed. The consumer is going to pay for this (always does). The value of non-dealer serviced used cars will plummet. Is the government going to regulate this too by forcing buyers to pay book value? Get out of the private sector!!

It works quite well in Europe and Australia, where you can eat off the floor of the average non-dealership workshop. Have you seen the average workshop of that type in SA? Even the ‘better’ branded (franchised) ones do not compare at all to those in the developed world. Untrained apprentices, insufficient tools and equipment, sloppy work methods are the order of the day. I see this every day so I know.

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