Spanners fly over code for auto trade
Car makers criticise proposed plan for vehicle repairers as well intentioned, but flawed
THE National Association of Automobile Manufacturers of SA (Naamsa) has criticised as well intentioned but flawed a voluntary code proposed by the Competition Commission for South Africa’s vehicle repair, servicing and parts supply sectors.
The code backs independent mechanics, of whom some 2 500 are represented by the Motor Industry Workshop Association, (Miwa) who are part of the right to repair modern cars at independent workshops.
When Les McMaster, chair of Miwa, launched the right to repair campaign in 2013, he said South African laws must change to follow the international Right to Repair (R2R) trend.
At the heart of the argument is the owner’s need to have a vehicle repaired at lower rates at independent aftermarket dealers without voiding the dealer or manufacturer’s warranty; against the original manufacturers’ need to profit from its investment in proprietary information, systems and tested safety standards.
“There is a need for a fair and competitive regulatory environment that enables freedom of choice for the consumers and that gives aftermarket businesses a chance to stay in business,” McMaster has been saying since 2013.
The Competition Commission backs this view with its proposed voluntary code for the auto trade, but Naamsa said in a statement on Monday while the code “appears well intentioned”, it overlooks a number of realities and important considerations in the auto trade.
Naamsa said the competition commission need to take into account the thin profit margins and the “intensely competitive nature of the industry”.
Naamsa said the automotive industry in South Africa did not deliberately exclude small medium enterprises from automotive aftermarket, repair, servicing and parts supply activities. Instead “market and commercial realities” are keeping small players out of the loop.
“Anyone can participate in franchise dealer operations,” states Naamsa, as long as they can overcome the “restrictions to participation”, which included access to loans, skilled technicians, expensive diagnostic technology as well as feet through the door.
“These represent market and commercial realities and should not be construed as anti-competitive,” said Naamsa.
Naamsa said there was also no need for independent workshops to vie for a slice of the warranty pie, as South Africa has over 11,2 million motor vehicles, of which 75% are no longer under warranty, service or maintenance plans.
“The competition authorities should be careful to avoid irreparable harm to an industry which has become the successful cornerstone of growth and development in South Africa.
“Already, the publication of the draft code of conduct and the associated uncertainty has resulted in established businesses, as well as potential new entrants, placing on hold any expansion decisions pending the outcome of the process,” said Naamsa.
“It is essential to safeguard investments of existing and future participants in the automotive value chain which in turn requires a code which is realistic and practical.
“In this regard, during June 2017, Naamsa made a submission to the Competition Commission on a code of conduct based on the Russian code with added elements from the European Union and Australian codes.”
Naamsa believes that the Competition Commission should revisit the industry’s earlier proposals in this regard, since they adequately address internationally accepted practices, the legitimate interests of consumers and the objectives envisaged by the Commission.
Moreover, any future proposals by the authorities should be subjected to a socio-economic-employment impact study to avoid negative consequences for the automotive industry, the South African economy and the industry’s customers.
Richard Clarke, chairperson of the not-for-profit Section 21 company R2RSA, told Wheels24 earlier this month that denying workshops the chance to repair vehicles because of warranties and access to information allows original equipment manufacturers to monopolise the auto trade.
“If there is no change, workshops will no longer be able to service new vehicles sold in five years’ time,” Clarke warned.
• A copy of Naamsa’s submission to the Competition Commission may be accessed on Naamsa’s website www.naamsa.co.za.
• For more information on the right to repair campaign, e-mail email@example.com.
“There is a need for a fair and competitive regulatory environment that enables freedom of choice for the consumers and that gives aftermarket businesses a chance to stay in business.”