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Vehicle aftermarket guidelines open market to independent operators

Will definitely cause downward pressure on manufacturer parts pricing, says Nada.
A warranty may be affected if damages to a vehicle result from work done by an independent provider or the fitment of non-original parts. Image: Moneyweb

Consumers face a number of risks if they take their in-warranty vehicle with a service plan to a non-franchised dealership for service or maintenance, the National Automobile Dealers’ Association (Nada) has warned.

However, Nada chair Mark Dommisse has also highlighted a number of positive elements in the final Guidelines for Competition in the South African Automotive Aftermarket, which were published by the Competition Commission in December 2020 and will be implemented from July 1 this year.

Dommisse believes the guidelines will definitely cause downward pressure on manufacturer parts pricing to the benefit of consumers.

Parts pricing

“That is already happening. All of the OEMs [original equipment manufacturers] are doing an analysis of their top 100 parts and comparing [them] to the so-called alternative part.

“Consumers will get a benefit there without a doubt. In some cases, alternative parts made in the same factory cost the same or are more expensive,” he said.

The guidelines require OEMs to adopt strategies and develop business models that, among others, allow for independent service providers (ISPs) and historically disadvantaged individuals to undertake service and maintenance while a vehicle is in warranty.

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Dommisse said this will lower the high barriers to entry to the vehicle aftermarket sector and facilitate inclusivity and transformation.

“OEMs and their respective dealer networks can now make previously protected technical information and training available outside of in-house programmes, and this ability to develop people and transfer skills is a particularly effective transformation credential.

“It must, however, be managed properly and Nada agrees in principle that the guidelines will achieve this,” he said.

Easier to make informed choices

The guidelines also place responsibility on OEMs to disclose certain information to consumers, such as the price of any pre-included service plan, maintenance plan, extended warranty or scratch-and-dent product, to enable them to make informed choices about the required future maintenance of their vehicles.

Dommisse said that when the guidelines take effect, consumers will be in a position to choose to have their servicing and maintenance work done at a workshop of their choice, including ISPs.

But Dommisse warned that by doing so, consumers will face certain obligations and consequences as set out in the guidelines, such as the possible voiding of parts of the warranty.

“Consumers should remain critically mindful that if their vehicle is not serviced or repaired correctly, and at an ISP, it could still have an impact on their vehicle’s factory warranty under the guidelines,” he said.

Dommisse provided an example of the misinterpretation of the guidelines, when it was incorrectly claimed that motorists can choose their own independent service or repair providers, if they wish to, “without their warranties being voided”.

‘Reckless misrepresentation’ of concern

Automotive business council Naamsa has welcomed the guidelines and stressed they present “positive disruptions” to the industry for which South Africa’s automotive industry is prepared but also noted with concern some reckless and persistent misrepresentation and miscommunication about the impact and implications of the guidelines.

Naamsa CEO Mikel Mabasa last week lashed out at “individuals and irresponsible groups who have made it their preoccupation to make public pronouncements that misrepresent and/or distort the true meaning behind the intent and the spirit of some of the principles within the guidelines in order to advance their narrow selfish commercial interests”.

Dommisse added that any damages to a vehicle as a result of work performed or non-original spare parts fitted by ISPs will be assessed by respective OEMs and either parts of, or the entire warranty can be voided.

Dispute resolution

Brandon Cohen, convener of Nada’s legal and compliance committee, stressed that any disputes will be handled by the Motor Industry Ombudsman of South Africa (MIOSA) and ISPs will need to ensure they are meeting their legal obligations in terms of the Consumer Protection Act.

Cohen highlighted Clause 5.4.6 of the guidelines, which states: “Accordingly, ISPs shall disclose to consumers, in clear and explicit terms, the risk of damage that could arise from the ISP’s work, including Consequential Damage to the Motor Vehicle, which may potentially void certain obligations of the OEM in terms of the Warranty.”

Dommisse said OEMs cannot prohibit a consumer from using an ISP but consumers will not be able to claim back from the manufacturer the cost of any service plan or warranty work done by an ISP.

A service plan is a contract between a consumer and the OEM to provide original parts with their warranty contract, he stressed.

Independents can become approved dealers

Dommisse added that if an ISP or any entity wishes to become an approved dealer, the OEM must have fair and transparent selection criteria and if the ISP meets those criteria, then the OEM should approve them.

An OEM is only obliged to approve an application if that ISP meets the full terms, conditions and criteria set out by the OEM, he said.

“This is vital for consumers to understand and is incorporated into the guidelines in order to protect the customer and the integrity of their vehicle,” he said.

Right to Repair SA (R2R) movement vice chair Filum Ho said last year when the final guidelines were published that they mark a major victory for consumers and the automotive industry in South Africa.

“By carrying out initiatives, such as unbundling the service and repair warranty market, we can expect better competition in the market, greater transformation, access, and freedom of choice.

“The measures to ensure greater inclusivity in the market, from the likes of independent and previously disadvantaged repair and service providers, will also go a long way in boosting transformation and access while creating new job opportunities,” he said.

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A great many parts in a vehicle has an OEM that is not a car manufacturer, So VW for example does not make the biXenon ballast, it buys it

For a shock :
Get price for a ballast for say a Touareg in SA.
Compare to price for same part on EBay Europe incl taxes including taxes and courier.

When runt was neatly 20 on Euro the difference was five-fold. As in buy 5 on EBay versus one here.

The manufacturer supply chain is a mess. VWSA prob buys as many ballasts as a large parts dealer in Austria at same price they pay the real OEM.
Then VWSA adds warehouse and overhead and the 100 markup to get price to VW Blikkiesdorp which then adds its costs and 100% to get to counter price,

Oh, and VW policy says when their diagnostic calls for an electronic part and said part turns out not to solve problem, they do not take back electronic parts..,

Many problems …

I was once quoted R2340 for a part from Nissan. I simply Googled the part number and had it mailed to me directly from China – it was only R262 (I even thought I was getting scammed online, but the part arrived in a few weeks and gave me no issues).

How ridiculous can OEM pricing be!

Help me understand here..
I buy a million ront car and have it serviced by a PDI at a roadside stall in the outback after which it sadly it stops running.
I can then take it back to the dealer for a new engine, free ?

Also struggling with that…

No, I don’t read it like that,you will ONLY have a case IF that PDI is affiliated to the OEM and the OEM is satisfied that they did the work as per the OEM standards and used OEM approved parts.
The OEM has the right to void the warranty if they consider those clauses breached.

The article actually sets it out quite nicely. If the OEM (in their opinion, I add…) thinks the ISP did the work wrong they will void your warranty. You must go the ombudsman if you disagree and the OEM knows how that will work out for Joe Soap…

The obvious way out for OEMs is more expensive cars that comes with 5 to 7 year “free” service plans…

Don’t worry the dealer has you covered.

You are screwed!!

Some years ago at a BMW dealer I asked for a sump plug as I wanteed to do an oil change. The guy went into the stores, came back and put the sump plug on the counter. he said ” what car is it for”. I looked at the plug and said “That’s the one I need”.
he asked again what car? then gave me three differeent prices for a BMW 3,5 0r 7 series sump plug. But all the same part!
The whole industry is a rip off.
I livein Belfast and the nearest dealer of any manufacturer is nearly 80km away.

Slightly off topic but along the same lines.

Years ago when I still flew a single engine plane I had to have the front wheel bearings changed. I asked for the old bearings because as a farmer I sometimes had a need for a bearing for something I was making.

They were put in the original packing, Cessna. When I looked at them I noticed a similarity between a bearing I had on hand. Lo and behold the same Timken bearing I had on hand for my Tractor’s front wheel. Massey Ferguson. I looked up the price from the tractor shop…..R15.00, from Cessna….R520.00.

Same applies to cars.

Car magazine in their car tests list a basket of spare parts. The variation on a headlamp is huge between various makes, A Datsun will set you back R2500, a smart top line BMW R85000. Check the spares prices before you buy.

I agree with you, however as someone involved in engineering to the commercial shipping industry I can assure you it’s due to (a) Liabilities and (b) Warranties. If you go and fit a bearing you buy yourself, even if it’s the same bearing,you immediately assume liability should that bearing fail, in aviation, as in shipping, lives can be lost and the repercussions can be onerous.
If you can show you purchased the failed part (albeit) at an inflated price from the manufacturer or their appointed distributor, liability passes to them.
It’s not a perfect system by any means, but its designed to protect the integrity of the entire product (ship, aircraft, vehicle etc)…as with anything, cheap always looks attractive.

I really don’t see that much changes, why on earth would I pay an ISP for a service when under my motor plan its free at the dealership.? Also if an ISP services it and I have an issue, the manufacturer can just turn around and say the warranty was void because of X,Y and Z.!
The truth is if you have a warranty and a motor plan then you would be forced to continue with the dealership, its only once those plans expire that it may benefit you to go to an ISP.
It’s really still exactly as its always been.!

As a retired motor dealer I can see many tears on the way. Many independents are far more expensive than some dealerships for servicing.
I would still stick to a dealership while the vehicle is under guarantee.

Indeed, the cost of a service, at the dealership is usually the same if not cheaper than many “known” aftermarket service providers.
I have no issues supporting OEM dealerships,in general they do the job according to manufacturer standards with no short cuts, i also feel if you have a genuine claim you have a lot more recourse with an OEM than an independent who may or may not be there 2 days /months down the road.
Or that’s always been my experience at least.

End of comments.

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