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• Independent service providers will be allowed to service and repair new cars in SA.
• The Competition Commission says the proposed guidelines will take effect in July 2021.
• Currently, only approved service providers can service and repair new cars in SA.
• For more motorsports stories, visit www.Wheels24.co.za
Restrictive service and repair warranty plans will finally be a thing of the past for South African car owners, following a major announcement from the Competition Commission.
Today, new car owners in South Africa are often forced to use the service centers, repair shops and parts of a vehicle manufacturer in “integrated” engine and service plans. If these owners use an independent service or repair provider of their own choosing, the vehicle manufacturers unfairly void their warranties.
But on Friday, December 11, 2020, the Commission released its final set of guidelines for the automotive aftermarket that will undo such practices in South Africa.
These guidelines, which go into effect on July 1, 2021, include several radical changes that will boost competition while creating new opportunities for emerging and independent vendors. All of these changes mark a major victory for consumers, SMEs, and transformation.
Mechanic
Key changes
The key changes announced include the following, as outlined in the final guidelines published by the Commission:
– That automobile manufacturers (known as Original Equipment Manufacturers) must recognize and not obstruct the consumer’s choice to seek service, maintenance and mechanical repair for their motor vehicles from a service provider of their choice, regardless of whether that supplier service provider is a reseller or an ISP (Independent Service Provider).
– Maintenance plans and service plans will be disaggregated at the point of sale of the purchase price of the motor vehicle. This will allow consumers to choose between purchasing the maintenance plan or the service plan and will make the service a more affordable option for South Africans, while allowing more players to provide these value-added products for consumers whose vehicles of motor are under warranty. .
– Original equipment manufacturers should take steps to promote and / or support the entry of new engine body repairers, with preference for historically disadvantaged-owned (HDI) businesses.
– Consumers can install original or non-original replacement parts, at a service provider of their choice, be it an authorized dealer, an authorized motor body repairer or an ISP, during the warranty period. But the quality of these will be carefully treated in accordance with consumer protection laws and existing guarantees.
The 39-page document outlines other important changes that include ensuring a lower barrier to entry for new concessionaires, particularly in municipalities and rural areas. Other changes include ensuring that insurers offer consumers more repair options within geographic areas for out-of-warranty repairs. The final guidelines are available on the Competition Commission website (Click here to see more).
Mechanics
Victory for consumers
Following consultations that began widely in the industry in 2017, these final guidelines mark a major victory for consumers and our industry in South Africa. By pursuing initiatives such as service and repair warranty market separation, we can expect better market competition, further transformation, access, and freedom of choice. Measures to ensure greater market inclusion, by independent and previously disadvantaged repair and service providers, will also go a long way toward driving transformation and access, while creating new job opportunities.
Strong guidelines are needed to unlock greater opportunities for SMEs in our industry and help generate economic growth. Global institutions, such as the World Bank, have regularly cited highly concentrated and uncompetitive sectors as a big reason for slow growth in South Africa. At a time when our country is emerging, and still grappling with, the impact of the coronavirus pandemic, this must change so that we can free ourselves from our status as the most economically unequal country in the world.
Filum Ho is the CEO of Autoboys.
