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By Georgina Crouth 
21h ago
As of July 1 of the next year, owners of vehicles under warranty can take their cars to any competent workshop for repair or service without risk of voiding their warranty.
The final guidelines of the Competition Commission for competition in the auto parts market are good news for consumers, smaller players and new entrants to the market. Distributors, manufacturers and insurers are unlikely to be enthusiastic about the guidelines because increased competition will threaten their monopoly.
The new regulation, issued by the commission after what it called a lack of cooperation from industry stakeholders, is the product of three years of consultations.
The investigation was said to have been prompted by complaints from consumers and independent operators. Initially conceived as voluntary, the guidelines are mandatory and must be followed by the industry.
Considered as a “practical guide” for industry players to become more competitive and promote greater participation by small businesses, especially historically disadvantaged players, the guidelines will require industry players to disclose certain information to consumers, which will allow them to make informed decisions.
A dispute resolution process and a self-monitoring mechanism by industry stakeholders are also mentioned.
Stakeholders include the National Automobile Manufacturers Association of South Africa, the National Association of Automobile Dealers, the SA Insurance Association, the SA Banking Association, original equipment manufacturers (OEMs) and individual insurers. The Right to Repair (a prominent voice advocating for inclusion), the Association of Motor Industry Workshops, the Federation of the Motor Industry, the African Association of Panelbeaters Motor Mechanics, the Association of Tires, Equipment and Auto Parts and Remanufacturers Association represented repairers and others in the after-sales service value chain.
The guidelines will require industry players to adopt strategies and develop business models that allow small, independent and historically disadvantaged service providers to perform service and repair work on vehicles under warranty; encourage historically disadvantaged ownership of concessionaires; ensure that insurers assign work fairly to service providers on their panels; promote the rights of consumers to use original or non-original vehicle parts; remove OEM restrictions on the sale and distribution of those original parts; promote the choice in the purchase of maintenance and service plans; as well as allowing access to technical information and OEM training by independent service providers. The latter issue is likely to lead to industry pushback regarding licensing and “commercially sensitive information”.
On Friday, Competition Commissioner Tembinkosi Bonakele said the guidelines were aimed at removing restrictions imposed by automakers on car owners on service providers for service and maintenance, as well as spare parts for your vehicles in accordance with international best practices.
“It will unleash entry and participation in the lucrative aftermarket value chain of HDI-owned SMEs and companies. This is in line with the commission’s strategy of opening markets to support growth and transformation. We urge OEMs to adopt the guidelines and adhere to them, as this requires them not to do more than they do in their home countries and in other parts of the world. For its part, the commission is absolutely committed to the application of the Competition Law in accordance with these guidelines ”.
The automotive industry comprises two related markets: the primary manufacturing market and the aftermarket, which is the aftermarket for the industry. This includes the retail sale of vehicles, the sale of parts and equipment (tires, accessories, spare parts), service, maintenance and repairs. Dealers act as intermediaries for finance houses, while insurance companies cover the costs of repairs or losses.
New vehicles are covered by the OEM warranty, which can apply to the entire vehicle, as well as individual parts and components. OEMs sell service and maintenance plans to consumers, with little transparency in the process, while third-party providers offer extended plans and warranties for vehicles outside of the warranty period.
Under the new guidelines, OEMs cannot obstruct the consumer’s choice to seek service, maintenance and mechanical repair for their vehicles from a service provider of their choice, regardless of whether that provider is an authorized dealer or independent operator.
Repairs to the engine body of the insured vehicles must be carried out by an authorized technician during the warranty period. Independent suppliers are required to disclose any risk of harm that may arise from their work, including consequential damage to the vehicle, which can potentially void certain OEM obligations.
in terms of the warranty and disclose whether they have adequate commercial insurance. The commission raised concerns about permanent contracts between original equipment manufacturers and approved repairers, saying some have been in place for decades.
“With few options available to insured consumers, arrangements can be inefficient, often leading to late appointments to repair their motor vehicles (long lead times). In addition, many consumers are forced to travel outside of their geographic locations to have their (vehicles) repaired in repair shops often located in distant locations, ”he noted.
Insurers must, he said, approve any repairer that meets their standards and specifications to perform repairs on out-of-warranty vehicles. He has also called for more transparency in the panel’s appointment process.
Les McMaster, director of Right 2 Repair, welcomed the guidelines and said they were a “nice Christmas surprise” because the guidelines were delayed and only expected next month.
“We didn’t get everything we wanted, but we’re happy with most of it, particularly data exchange (with parts encoded with VIN numbers) and warranty service, from which we had been excluded for years of vehicle life. It is a win-win.
“You have to put a lot of ducks in lines, but now we are included in a lot of areas that we weren’t in before.”
Starting in July next year, all new vehicles will be sold without integrated service or maintenance plans. “
Filum Ho, CEO of Autoboys, a specialist in glass and auto parts, also praised the guidelines, saying they offer more inclusion, consumer choice and transparency.
“From an aftermarket perspective, we are very pleased that it gives us more access. One of the biggest advantages is that OEMs must separate the price of the vehicle from the service plan – they must be transparent about what the vehicle and the service plan costs, and customers don’t have to buy both together. You can go to a new dealership and buy a service plan elsewhere, or choose not to have one. “
Dealers also may not refuse to service or repair vehicles if they have non-original quality parts, such as windshields or tires installed. The warranty is divisible and remains applicable, meaning that if a headlight is defective, the OEM must still replace it, he says. Some OEMs will also only sell spare parts to those in their network, that will no longer be allowed.
An added benefit for the consumer is when cars pay for themselves – OEMs will have to refund or roll over the balance of the service plan. “When you pay for a plan, there is a value attached to the balance of that plan. In the past, that balance just disappeared. Rightly, they have to reimburse you. OEMs are going to hate this, but it’s about protecting the consumer. “
The guidelines also offer greater inclusion, which will support SMEs for a healthy and dynamic economy. “This is not voluntary; it was originally meant to be a volunteer. But we knew that voluntary compliance would be lip service. We are very happy that he is not a volunteer. “
The insurance association could not immediately comment on Friday. Naamsa said he is studying the final guidelines and will issue a statement “in due course.”
Nothing could be reached for comment.
* Georgina Crouth is a consumer watchdog with a serious bite. Write to [email protected], Tweet @georginacrouth and follow her on Facebook.
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