Motor firms give nod to aftersales
• Sector says it will support the plans in pursuit of transformation
Motor companies have finally declared their support for Competition Commission plans to open the automotive aftermarket to greater competition, a move supporters say will offer customers more choice and lower costs.
Motor companies have finally declared their support for Competition Commission plans to open the automotive aftermarket to greater competition, a move supporters say will offer customers more choice and lower costs.
Having previously declared itself “gravely disturbed” by the commission’s “blunt instrument” approach to throwing open the vehicle service and repair sector, the Automotive Business Council — formerly the National Association of Automobile Manufacturers of SA — said on Wednesday that while it still had misgivings, it would support the plans in pursuit of overall motor industry transformation.
Gary McCraw, director of the National Automobile Dealers’ Association (Nada), whose 1,340 franchised dealers stand to lose most from the new regulations, said he held a similar view. “We support the overriding principles and transformation goals.”
Nada, a fierce critic of the guidelines in their early stages, has yet to issue a formal response to the commission’s final guidelines, which were published in mid-December.
From July 1, motor companies will no longer be able to rigidly dictate who services vehicles under warranty, offering consumers the option to shop around.
They will also have the choice of whether to buy a service and maintenance plan, which adds thousands of rand to the cost of a vehicle purchase.
At the moment, most plans are compulsory.
In December, the commission published the final version of its “Guidelines for Competition in the SA Automotive Aftermarket” in response to what it said was a decade of complaints about anticompetitive behaviour. In a nutshell, motor and insurance companies were accused of using “exclusionary” agreements to shut out independent, mainly black, operators from much of the lucrative maintenance and repair market.
Motor insurance is said to account for about 45% of nonlife insurance in SA.
The commission estimates that annual spending on motorbody repairs is worth R10bn. However, it says insurers have allocated work to an unjustifiably small number of panelbeaters and repair shops, to the exclusion of smaller operators. That must also change from July.
In the case of both service and repairs, motor firms will no longer be able to insist on the use of their own “original” replacement parts, which usually come at a big price premium.
Mechanics will be allowed to use any parts certified to the same standard.
Sisa Mbangxa, chair of the African Panel Beaters and Motor Mechanics Association, said the new rules on servicing and repairs could have major benefits for consumers.
“We don’t have the enormous overheads and multimillionrand investments of franchised motor dealers, and our labour rates are much lower, so we can carry out work for a fraction of the cost,” he said.
Not everyone can do the work, however. Independents hoping to win warranty business will have to meet quality standards set by motor companies, which will be expected to provide training at a reasonable cost. Mbangxa believes 25 of his 200 members are now able to comply but says they will need financial support to become fully fledged service providers.
He has applied to the R6bn Automotive Industry Transformation Fund, bankrolled by local vehicle manufacturers, for help to set them up. In the early stages of the commission’s consultations, motor companies and dealers complained that their views were ignored in successive iterations of the guidelines.
After what Automotive Business Council CEO Mike Mabasa described as “inclusive, open, transparent and robust” exchanges, the final version has addressed some of these.
For example, motor companies will no longer have to provide free training and equipment to independent operators. At one stage, the commission suggested that consumers should be allowed to take their warrantied vehicles for service at nonapproved workshops, without jeopardising warranties.
They can still choose their provider but now it must be made clear that warranties may be voided if standards rules are not met. “We need a lot of consumer education for people to know what they can and can’t do,” said McCraw.
He said it was impossible to predict how much business would move from franchised dealers to independent operators. It was up to each motor company to decide how to work within the new rules.
“There won’t be a common approach,” he said. “Each brand will have to apply the guidelines as it sees fit.”