You will soon be able to service your car anywhere

Vehicle manufacturers react with outrage to draft guidelines published by Competition Commission.
Restrictions on the sale of original branded parts and components to independent service providers may be lifted. Image: Shiho Fukada, Bloomberg

Local vehicle manufacturers are outraged at proposed guidelines for the aftermarket industry that will allow consumers to select a workshop of their choice when having their vehicles serviced, maintained and repaired.

Read: New automotive code set to shake up the sector

New vehicle owners are currently compelled to have in-warranty service, maintenance or repair work conducted only at approved dealers or approved service providers.

The proposed guidelines, which were published for public comment by the Competition Commission on Friday, also deal with the relationship between original equipment manufacturers (OEMs) and dealers.

Among other things, they state that OEMs must not impose onerous obligations on prospective dealers.

Grandiose ‘Taj Mahal’ type dealerships have become commonplace in South Africa.

However, the guidelines state: “The requirements for dealers must be reasonable and have an economic rationale, particularly in relation to the size of land, showrooms, furniture, fittings and finishes.”

Naamsa not happy

National Association of Automobile Manufacturers of South Africa (Naamsa) chief executive Michael Mabasa said on Monday that while the industry does not have any objection to any of the substantive reforms proposed in the guidelines, introducing these enforceable guidelines is extremely punitive and a dangerous retrogressive step that is counterproductive and will harm the economy.

Mabasa said the proposed guidelines will compel the automotive industry to implement enforceable measures that could fundamentally change the current nature and structure of the automotive retail and aftermarket value chains in the country.

He said they will also bring about some profound structural changes that will intrinsically remould the existing business models of all automotive multinational companies which continue to invest emphatically in the country’s economy, its workforce and its overall future growth.

Mabasa added that Naamsa believes the industry is gradually creating a fertile environment upon which reforms can be implemented without harming the economy.

He urged the commission to reconsider “its punitive approach” and rather use any guidelines it formulates as an industrial policy tool to stimulate economic growth and inspire business confidence.

“The trajectory chosen by the commission this time, regrettably, is likely to achieve the opposite outcomes,” he said.

‘Big win’ for consumers

However, Right to Repair SA (R2R), a Section 21 not-for-profit organisation that has been advocating for freedom of repair choice for vehicle owners, has welcomed the publication of the draft guidelines, adding that it is a positive move for the industry and a big win for consumers.

Read: Vehicle repair industry in for a shake-up (2015)

R2R chair Gunther Schmitz said it is encouraging to see such a strong focus on increased consumer choice, fair competition and competitive pricing – and that the increased transparency and freedom of choice for consumers will help grow small business.

The unbundling of maintenance and service plans from the purchase price of the vehicle at the point of sale is another win for the consumer. 

Schmitz said at point of sale, dealers and financiers must now provide the consumer with details of all inclusions and exclusions in their service and maintenance plans.

He said the draft guidelines point out that “this will allow consumers to exercise choice regarding whether to purchase the maintenance or service plan and make servicing a more affordable option for South Africans, while allowing for more players to provide such value-added services for consumers whose vehicles are in-warranty”. 

“It is good for the industry and good for consumers who can now make informed financial choices,” he said.

Access to technical information

Schmitz said it is encouraging that the commission acknowledged that access to technical information remains a prerequisite for effective competition in the automotive aftermarket.

He said the commission is removing that obstacle by directing OEMs to share key technical information with independent service providers for both in-warranty and out-of-warranty motor vehicles.

In the introduction to the draft guidelines, the commission said it has over the past decade received complaints regarding restrictive agreements between OEMs and various automotive aftermarket industry participants, including dealers and insurers, across the value chain.

It said some of the competition concerns identified are:

  • The exclusion or foreclosure of independent service providers in the markets for the service and maintenance, mechanical repairs and motor-body repairs of in-warranty motor vehicles;
  • Unclear and allegedly unfair allocation of work by insurers in the allocation of motor-body repairs;
  • Restrictions on the sale of OEM branded parts and components to independent service providers;
  • High barriers to entry that exclude small and historically disadvantaged persons from becoming authorised dealers; and
  • A lack of competition and consumer choice in the sale and fitment of spare parts.
 

The commission said the guidelines are directed at addressing constraints to competition in the automotive aftermarket industry and to promote compliance with the spirit, intent and objectives of the Competition Act by encouraging relevant stakeholders to adopt and promote principles of effective competition regulation for a growing and inclusive economy.

It said the specific objectives of the guidelines are to:

  • Promote principles and remedies that lower barriers to entry and ensure that a greater number of firms have an opportunity to undertake service and maintenance work, mechanical repairs and motor vehicle repairs within the period covered by the vehicle’s warranty;
  • Increase consumer choice and facilitate competition and competitive pricing in the markets for new vehicles, spare parts and value-added products;
  • Increase transparency and facilitate consumer choice in relation to the service, maintenance, mechanical and motor-body repairs of vehicles.

The guidelines aim to achieve these objectives by encouraging stakeholders to adopt measures that:

  • 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;
  • Ensure that independent service providers can undertake in-warranty service and maintenance work and in-warranty motor-body repairs;
  • Allow for greater consumer choice and product competition in the retail of service plans and/or maintenance plans; and
  • Ensure the fair allocation of motor-body repairs among approved service providers based on their competitive merits such as service, quality of work and price.

Stakeholders have until March 16 to submit formal comments on the guidelines.

 

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…..Australia and New Zealand made the same ruling and no issues after, despite its equivalent “ Naamsa “ crying like a baby over stolen “candy”

Dealerships have become synonymous with Mafia in their after sales service

New Zealand import used Japanese cars, as far as I am aware.

With my final free serve was being done I was told that my brake pads were down to 2mm and could replaced for R2000 I said not now. I went to local mechanic who removed wheels and measured the pads to be 12&mm I have not back to that dealer since. Know buy parts elsewhere for a typical service I buy oil and filters and pay R00 toR300 for a devise every 15000km

This is not Australia or New Zealand. SA is a third world, corrupt basket case. It cannot work here because it will not be possible to accredit service centres and ensure they don’t install rubbish parts that then have to be guaranteed by the dealer/manufacturer.

It will be your choice who to use.

That is the point. CHOICE

Point of Order! South Africa is not a third world country. Far from that and far above that.

Would i go to a filthy State Hospital for an enema or to a Private one? If i have a medical aid the choice is obvious

Similarly, if my vehicle has a Service Plan, here to the choice is obvious

You can argue that not all if us can afford the luxury, then why don’t buy a new vehicle?

I for one, should i be in the market for a vehicle, will only purchase a used vehicle with a balance of a service plan, serviced by the dealership. This is a third world country where corruption is rife. I won’t waiver my choices

As the article alluded to, it’s my choice

@Seve Roux

You talk neatly around the point of this legislation.

Currently cars in South Africa come with anything between a 3 and 10 year warrantee. The dealership franchises force the owner to service their vehicles at one of the dealerships in the franchise network or lose their warrantee.

i.e. If you have a service plan then great. If you don’t have a service plan and your car is still in warrantee then you will be robbed blind by these dealership networks.

What this legislation enables is that as long as you have a recognised mechanic (e.g. a Bosch service centre) and you fit VW parts to a VW and BMW parts to a BMW, then you don’t lose your warrantee.

This can work out good for the motorist. Some brands really took things too far. And they must thread lightly, there is a big shake-up in the motor industry.

This should be a big win for for all of us who have vehicle insurance. Premiums must come down significantly as I would think the supply chain of replacement parts and repair costs would be much cheaper as there’s more choice and less red tape in the system.

The battle for my hard earned Rand and Cents will never stop… This is all greed. We always believed motor service plans were a good buy, but the opposite always prevails.

Invoices on motor plan vehicles when new are below a the cost of labour on that vehicle. As soon as the plan expires they become 10 times in reverse. You get a better deal from independent service hubs.

When my car was out of the service plan but still under warranty, the dealer wanted to charge me R 6500 odd for replacing brakes, which it turned out was not needed when I had it done privately for R 2500. I will be extremely reluctant to buy another vehicle sold by that dealership, and it is one of the luxury German brands, which one would expect better from.

The modern petrol car engine i.e. a petrol car build in the last 30 years can last 480 000 km if the car is serviced when it is meant to be serviced and driven slowly.

Odometers on new cars today can still be changed by removing the vehicles circuit board to change the odometer reading or using rollback equipment that hooks right into the vehicles electronic system.

People say you can’t change the reading on new cars odometer, that is incorrect, you still can, it is fraud.

No one can give me a satisfactory answer why the same new car build in South Africa sells for 30% less in Australia than it does in South Africa?

I had an issue with my SUV which kept cutting out. Suspected dirty diesel was the cause. After flush of tanks, common rail replacement, etc on the manufacturer’s account, it dawned that the sensors were faulty and they proceeded to change the instrument panel.

was amazed that the dealers did not have access to the vehicle’s service history in the country, as they are owned independently. Really??

Solved the problem as the fuel readings were now correct, but guess what? Odometer reset from +-95000km to 0.

So, if I wished to be dishonest, I can chuck the service book, sell the vehicle at what appears to be very low mileage, and the poor sod buying it would be none the wiser.

…like the old ‘Van der Merwe’ joke….now that your SUV odo-meter is re-set, I’d NOT SELL it. It’s like brand new now *lol*

Yanni, I have answered on this comment previously. With a simple example of a Ford Ecosport (imported into both countries). The price was not 30% different.

So maybe no one is answering that question because it’s not based in fact.

Quote your example – like for like on the spec sheet, and show me the 30% gap.

I do concede that cars maybe more affordable over there, but sticker price, the cars I have looked at is not 30% different

Some more examples @ exchange rate 19/2/2020 and all for sydney post code
FORD (these are made here as far as I know)
Entry Level Ranger Double Cab: ZAR362k or AUD36, AUS AUD44
Raptor: ZAR 837k or AUD83.7, AUS AUD85.5

BMW X3 (made here)
2.0 base price: SA AUD69k AUS AUD 64

Volkswagen POLO (not made here – vivo is as far as I understand)
BAse Polo: 25k vs 19k (your 30 % example)
Top of Range: 31.5k vs 27k (17%)
Polo GTI: 40 vs 35 (14%)

So I guess if you want to drive the most sold car in SA, you will pay that 30% premium. But there is other options – Ah, that choice thing again

Seems as if the CC does not have enough work to do. Do they really think I am gong to take my new(ish) Toyota to a Nissan or any other dealer to be serviced. You must be joking, I wonder what this bit useless of legislation will cost us. R2R should focus on steel 🙂 with no electricity?

Agree, resale will still be better if serviced at OEMs who have daily experience on your exact model.

Anyway, since when has more regulation actually worked. If you’re being robbed by your car dealer, buy another brand with reliable after sales service. Customer choice regulates the market, not government interventions, who have better things to regulate. Like their own capabilities.

@Stef you are 100% correct. More government intervention that adds no value. Let’s not give jobs to people who damage the economy.

You havent read the article properly and you havent read previous comments. There is a difference between a motor plan and a warranty. In a motor plan your car is serviced for free based on how long that motor plan is. In the warranty you do not have a free service and you need to make use of an authorised service provider. If a brake pad cost you a 1000.00 at an alternate service provider which is not rocket science and complicated to do and the make of the brake pad is of a good quality, the authorised service provider might charge you 3000 or 4000.00. The point is that why should you pay that extra 2000 or 3000 for something that plain and simple to not loose your warranty.

I trust this will bring about transformation in the whole industry, as the insurance underwriters of maintenance & warranty plans still enforce their collusion with the RMI approved mechanical crooks, irrespective if you presents fact to the RMI. Luckily the court could remedy the situation in my experience.

So if I take my car to a back yard mechanic who installs cheap chinese or second hand parts the dealer/manufacturer must guarantee it? This proposal can only work in a first world country where service centres can be genuinly accredited. In SA we cannot even ensure a licencing department is above board. Get real and recognise that we are a third world corrupt basket case and act accordingly. Stop trying to be something we have no hope of becoming under the current regime.

As a retiree, from extensive knowledge of the industry anyone using anyone else other than the dealership especially while the vehicle is under warranty or service contract will be a huge mistake.
Dealer staff have training on new models or concepts whereas non dealership workshops don’t.
Proper mechanic/technician training ended after 1994 so no real good qualified technicians around any longer. Dealerships are even battling to find them.
There are manufacturers that have stopped selling engine and gearbox parts through there dealership spares departments due to the fact that there are no technicians suitably qualified to repair engines and auto boxes and giving products a bad name. Only complete factory built engines a gearboxes are available.That says something doesn’t it.
Beware people there are very few pre-1994 qualified technicians left.

yeh, I had my car serviced by car service city a few years ago – NEVER AGAIN. whenever I take my car to the manufacturer I always get the – your car needs x thousand rands worth of work – which it usually doesn’t.

Tell me if its not pure robbery to charge R900 just to run the diagnosis. To plug their diagnosis machine to the car computer for R900 to read the codes

There is a lot to say about this legislation, but in the end it will be for the good of all vehicle owners. There is a lot of highly qualified technicians that can start their own businesses and service vehicles that they have experience off. Pessonally I have the following experiences:
1. I just imported a spring/spiral hooter cable for R950-00 all taxes and shipping included (local agent price R8588-50 … part only) and had it installed by an technician with his own workshop for R650-00. Total cost probably 16% of what the agents charge.
2. Inlet manifold of my other vehicle had to be replaced. Imported cost of part – R6 500-00, local price from agents – R17 000-00. Part cost 38% of what the agents charge.

VW quoted me R18000 to replace waterpump and thermostat, kid you not.

At the end I decided to get the parts from ECS Tuning, the parts and shipping cost me R7500, and too the car to an independent mechanic who used to work for VW and got everything replaced. Instead of spending R18000, I ended up spending R9000 – so dealerships are ripping people off.

By the way the OEM they keep making noise about most of them are manufactured by the likes of Bosch. So this will be beneficial for consumers and all legit independent repair centres

So this regulations advocates for Choice. But what do people read, “I cannot take my car to the OEM dealer anymore”

Jeez people. If you feel uncomfortable with the accreditation process because this is a 3rd world basket case – don’t take it there. You are not forced to, the OEM is still there. (and maybe cheeper).

If you buy a Hyundai because of it’s leading 7 year warranty, if just is not right to charge 3-4 times for the same Bosch Brakes (or some other manufacturer) just because they put it in a Hyundai carton box. Just to keep your warranty. Come on. Some people are even skilled doing it themselves.

So Choice. Some will pay the 4 times, some will pay the 2 times and others will DIY. The market will sort itself out and maybe before you know it OEM are reasonable.

My anecdote on my Audi Q5 – We do not have an Audi garage in town, so phone VW, same thing right? Why could a VW service centre replace my 2.0TDI timing belt at R600 per hour labour but the Audi dealer charged R1,000. And then VW is obliged to refuse to service my car (which was not even in warranty anymore).

Choice people, Choice

A few years ago, MB C200, goes for service at MB out of service plan.
First item check brakes for wear, R250 per wheel to remove/refit.
Thats what, R50 per wheelnut?
Last item on invoice, take car for quick test, R800.
Absolute daylight robbery.

Anyone bothered to consider the banks and finance companies…the real owners of these assets…what they think being sadldled with a broken car after joe-soap’s back yard mechanics have had “a go” at repairing their security?

End of comments.

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