Carmakers call for review of new code

Proposals overlook ‘realities’

THE NATIONAL Association of Automobile Manufacturers of South Africa (Naamsa) has called for a further review of the recently published proposed voluntary code of conduct produced by the Competition Commission for the vehicle servicing and repair market in South Africa.

Nico Vermeulen, the director of Naamsa, yesterday said that the proposals for operations in the vehicle repair, servicing and parts supply sectors “appears well intentioned, but it overlooks a number of realities and important considerations”.

Vermeulen said that the draft code appeared premised on the notion that the automotive industry in South Africa was a closed system that deliberately excluded “competitors, particularly small and medium enterprises for automotive after market, repair, servicing and parts supply activities.

He said that this premise was incorrect, adding that the only restrictions to participation in franchise dealer operations, including vehicle repair and servicing, comprised access to capital, appropriate skills, technology and economic viability limitations in the form of the number of dealerships/servicing outlets per area.

“These represent market and commercial realities and should not be construed as anti-competitive.

“Anyone can participate in the industry on the same terms and conditions,” he said.

Vermeulen warned that the competition authorities should be careful to avoid causing irreparable harm to an industry that had become the successful cornerstone of growth and development in South Africa.

He said the publication of the draft code of conduct and the associated uncertainty had resulted in established businesses and potential new entrants placing on hold any expansion decisions, pending the outcome of the process.

Vermeulen stressed the need for a code that was “realistic and practical” and Naamsa remained committed to continue engagements with competition authorities and other stakeholders in the formulation of such a code of conduct that took account of the realities prevailing in the South African servicing and repair sectors.

He referred to the Naamsa submission to the commission on a code of conduct based on the Russian code with added elements from the EU 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 in order to avoid negative consequences for the automotive industry, the South African economy and the industry’s customers,” he said.

Competitive

Vermeulen said the competition authorities needed to take into account the intensely competitive nature of the industry, the legal agreements governing the relationship between automotive companies, dealers and service providers, intellectual property provisions and related factors, including the rights of consumers to safety and quality of service.

He said brand and reputational protection was exercised through established franchise dealer structures with singular focus on the interests of consumers and their safety, particularly in respect of safety critical repairs and servicing.

“There can be no compromise on customer safety and quality of service,” he said.

Vermeulen added that out of a vehicle park of more than 11.2 million motor vehicles, about 75 percent comprised vehicles that were not subject to manufacturers’ warranty, service or maintenance plans