A Perspective On SA’s Proposed New Motor Industry Code
Johannesburg – The days of vehicle manufacturers threatening to void your warranty if you use an independent service centre or repair shop will soon be a thing of the past.
This is because the Competition Commission of South Africa is currently putting the final touches on a historic new Code of Conduct for the South African Automotive Industry. The proposed Code is expected to empower car owners with the right to repair or service their vehicles at a provider of their choice, without voiding their warranties.
As it stands, local car owners are unique in the world because they are typically locked into using a vehicle manufacturer’s service centres, repair shops and parts in what are dubbed ‘embedded’ motor or service plans.
The new Code of Conduct will be voluntary, but participants will be monitored by organisations such as Right to Repair South Africa (R2RSA) and even the public at large.
Here are five ways the code will benefit you as a car owner.
1) You choose where to service or repair your vehicle
With the new code, you’ll have the right to choose where you can service or repair your vehicle without voiding your warranty. The latest draft of the code states that “independent service providers can undertake in-warranty service and maintenance work and in-warranty motor-body repairs”.
The code adds that this will widen “the pool of approved service providers who can undertake in-warranty service and maintenance work, in-warranty mechanical repairs, and in-warranty motor-body repairs.”
With there being an estimated 8000 independent service workshops in SA, this will give you ample choice and more competitive pricing.
The code also stipulates that car owners will also be protected by the Consumer Protection Act if anything goes wrong.
2) More choices when it comes to vehicle parts
With embedded motor or service plans, many vehicle manufacturers lock you into using their original parts, which typically are costed at a premium.
The vehicle manufacturers often say that this ensures your car will always have ‘quality parts’ specifically geared towards its type and brand.
But this argument doesn’t hold water any more as there is a wide availability of high-quality, alternative parts in South Africa.
The Competition Commission has recognised this as a fact in the industry. Subsequently, its draft code has said that there will be “no unfair restrictions on the sale or distribution of original spare parts; allowing greater consumer choice in choosing suitable spare parts for repairs and maintenance of their motor vehicles”.
3) Potentially lower insurance premiums
It’s not just the end-consumer who will have more choice, but insurance companies as well. The Competition Commission says that “insurers may appoint and consumers may choose to appoint ISPs (independent service providers) to undertake non-structural work on motor vehicles during the warranty period.”
The code goes on to say that a consumer’s warranty won’t be voided if an insurance company decides to go with an independent service provider for non-structural work on your car. This should benefit insurers by giving them access to a wider pool of high-quality parts at lower cost, possibly resulting in lower premiums. The code further encourages insurers to “offer consumers a choice of approved repairers within their geographic area from which they can select to repair their motor vehicles”.
4) Much greater transparency
Another key stated objective of the new code is to “increase transparency and facilitate consumer choice in relation to the service, maintenance, mechanical and motor-body repairs of vehicles”.
For example, the code states that “consumers must be advised, in clear and explicit terms, that they are not compelled to conduct motor-body repairs only at approved dealers or approved service providers.”
Because consumers will be more aware of the details of their choices, the spin-off will be that manufacturers and independent service providers will increasingly have to disclose information and pricing of their offerings to secure business from the car owner.
5) Transformation and a more inclusive industry
Finally, but most importantly, the code seeks to drive the transformation of the industry by levelling the playing field. It will do this by pushing for Original Equipment Manufacturers (OEMs) to “promote the entry of historically disadvantaged individuals (HDIs) into an OEM’s network of service and maintenance service providers.”
For instance, OEMs will be expected to include black-owned providers in their networks through subsidisation of capital, facilities, tools, equipment and training required to meet their standards.
In turn, insurers will be tasked with broadening the allocation of repair work to black-owned and black-operated firms.
As you can see, the code has a wide-ranging impact for the industry. But at its heart, it seeks to empower you the consumer by making the industry more open, transparent and inclusive.
Filum Ho is the CEO of South African auto parts and glass specialists Autoboys. Filum transitioned from a top career in investment banking at the likes of Deutsche Bank and Merrill Lynch to shaking up SA’s auto parts and glass markets. In 2017, African Rainbow Capital (ARC) acquired a 51% stake in Autoboys, making it SA’s first black-owned national glass and collision parts provider. Filum is also the Vice Chairman of Right to Repair SA (R2RSA).
Original article published on: https://www.iol.co.za/motoring/industry-news/a-perspective-on-sas-proposed-new-motor-industry-code-17794053